Overdrive Extra

Max Heine

Manufacturing numbers strong for August

| September 01, 2009

Lots of good news for trucking in today’s report from the Institute for Supply Management.

Economic activity in manufacturing expanded in August, following 18 consecutive months of contraction, according to the nation’s supply executives polled for the latest Manufacturing ISM Report on Business. The August numbers also show the overall economy grew for the fourth consecutive month.

“The year-and-a-half decline in manufacturing output has come to an end, as 11 of 18 manufacturing industries are reporting growth when comparing August to July,” says Norbert Ore of ISM. “While this is certainly a positive occurrence, we have to keep in mind that it is the beginning of a new cycle and that all industries are not yet participating in the growth.”

Those hot 11 sectors are, in order: Textile Mills; Apparel, Leather & Allied Products; Paper Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Computer & Electronic Products; Transportation Equipment; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Chemical Products.

The six industries reporting contraction are: Primary Metals; Plastics & Rubber Products; Furniture & Related Products; Wood Products; Food, Beverage & Tobacco Products; and Machinery.

“The August index of 52.9 percent is the highest since June 2007,” Ore says of the PMI (Purchasing Managers Index). “The 4 percentage point increase was driven by significant strength in the New Orders Index, which is up 9.6 points to 64.9 percent, the highest since December 2004. The growth appears sustainable in the short term, as inventories have been reduced for 40 consecutive months and supply chains will have to re-stock to meet this new demand.”

Ore also notes that if the PMI for August (52.9 percent) “is annualized, it corresponds to a 3.7 percent increase in real GDP annually.”

 – Max Heine

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