August 2018 Manufacturing ISM Report On Business Shows Strong Growth Continues, Resulting In Growing Order Backlog and Slower Supplier Deliveries

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector expanded in August, and the overall economy grew for the 112th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing expanded in August as the PMI registered 61.3 percent, an increase of 3.2 percentage points from the July reading of 58.1 percent.  This indicates strong growth in manufacturing for the 24th consecutive month, led by continued expansion in all sub-indexes that make up the PMI.

ISM’s New Orders Index registered 65.1 percent in August, which is an increase of 4.9 percentage points when compared to the 60.2 percent reported for July, indicating growth in new orders for the 32nd consecutive month.

ISM’s Production Index registered 63.3 percent in August, which is an increase of 4.8 percentage points when compared to the 58.5 percent reported for July, indicating growth in production for the 24th consecutive month.

ISM’s Employment Index registered 58.5 percent in August, an increase of 2 percentage points when compared to the July reading of 56.5 percent. This indicates growth in employment in August for the 23rd consecutive month.

The delivery performance of suppliers to manufacturing organizations slowed in August, as the Supplier Deliveries Index registered 64.5 percent.  This is 2.4 percentage points higher than the 62.1 percent reported for July. This is the 23rd straight month of slowing supplier deliveries and indicates the supply chain’s difficulty in keeping up with new order and production demand.

The Inventories Index registered 55.4 percent in August, which is an increase of 2.1 percentage points when compared to the 53.3 percent reported for July, indicating growth in raw materials inventories for the eighth consecutive month.

The ISM Prices Index registered 72.1 percent in August, a decrease of 1.1 percentage points from the July reading of 73.2 percent, indicating an increase in raw materials prices for the 30th consecutive month.  In August, 51.1 percent of respondents reported paying higher prices, 6.8 percent reported paying lower prices, and 42 percent of supply executives reported paying the same prices as in July.

ISM’s Backlog of Orders Index registered 57.5 percent in August, which is 2.8 percentage points higher than the 54.7 percent reported in July, indicating growth in order backlogs for the 19th consecutive month.

Of the 18 manufacturing industries, 16 reported growth in August, in the following order: Computer & Electronic Products; Apparel, Leather & Allied Products; Textile Mills; Paper Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Furniture & Related Products; Machinery; Nonmetallic Mineral Products; Transportation Equipment; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; and Printing & Related Support Activities.  The two industries reporting contraction in August are: Wood Products; and Primary Metals.