Manufacturing activity in the
U.S. reached a 13-year high in September, as strong demand and order growth
rode out a severe hurricane season.
The Institute for Supply
Management said Monday that its index of manufacturing activity climbed to 60.8
last month from 58.8 in August, hitting its highest reading since May 2004. A
reading above 50 indicates sector expansion as measured by factors such as
sales, output and hiring.
The reading exceeded economist
expectations and suggests the factory sector is weathering the impact of three
recent major Atlantic hurricanes -- Harvey, Irma and Maria.
"The economy appears to have
take the punch and rolled with it," Ian Shepherdson, chief economist at
Pantheon Macroeconomics, said of the storm disruption.
The survey found "expanding
business conditions, with new orders, production, employment, order backlogs
and export orders all growing in September," the ISM said.
The initial storm impact showed
up prominently in the ISM Prices Index, which jumped 9.5 percentage points on
the month to 71.5, reflecting higher costs of raw materials like chemical
products and metals.
It was also reflected in
manufacturers' longer wait times, seen in a 7.3 percentage point jump in the
Supplier Deliveries Index to 64.4, its highest level since July 2004.
"But even away from this
index, many of the other survey components pointed to strength in the
manufacturing sector, including increases in the measures of orders,
production, and employment," J.P. Morgan Chase economist Daniel Silver
said in a note to clients.
The survey reported concern among
manufacturers about potential short-supply of products and higher prices in
Timothy Fiore, head of the ISM
survey, said he expects residual impact on the sector over the next three to
six months because of the hurricanes, but "overall, they are not going to
change the fundamental factors of demand, and in fact could reflect increased
demand because of the destruction element."
Manufacturing accounts for only
about 12% of U.S. economic output, but the sector is closely watched for
signals about the trajectory of the wider economy. Stronger growth overseas,
high consumer confidence and a weaker dollar helped bolster factories' sales
and hiring in recent months.
Consumer confidence declined in
September but remained high, according to the University of Michigan's final
reading of consumer sentiment. Households are expecting inflation to pickup in
the next year, the survey said, a sign of a solid economy.
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