Manufacturing activity in the USA reached a six-year high in August, with factories continuing to register a big rise in sales and boosting hiring in response.
The manufacturing index, also known as the purchasing managers index (PMI), edged up to 58.8 in August from 56.3 in July, the Institute for Supply Management (ISM) said. Any reading above 50% indicates improving conditions.
"It was a really, really strong number", Timothy Fiore, chair of ISM's Manufacturing Business Survey Committee, said on a conference call. It was the highest reading since April 2011.
"There's a constraint on labor", Fiore said. Of the eighteen manufacturing industries, fourteen reported growth, while three reported contraction.
Other categories like exports and new orders continue to grow strongly, although at a slower pace than in July, the report showed. This reflects a jump in employment to its highest level since June 2011, as well as rising inventories, and a modest increase in production.
The New Orders Index decreased 0.1 point to 60.3 in August, indicating growth for the twelfth consecutive month. Thirteen industries reported job gains, including machinery, transportation equipment, petroleum and coal products and fabricated metal products.
The employment component increased sharply to 59.9 from 55.2 which will boost optimism surrounding manufacturing employment, especially after a firm increase in manufacturing payrolls for August.