U.S. manufacturing surged in August, as demand for metals and plastics rose. The Institute for Supply Management’s manufacturing gauge rose to 59, its strongest level since March 2011, compared with 57.1 in July. The sub-index for orders was the highest in 10 years.
Manufacturers across the U.S. are gaining from resurgent auto sales and increased business spending on new equipment, boosting growth amid growing geopolitical tensions in Europe. Faster income growth is now required to increase consumer spending beyond automobiles.
“The manufacturing sector is just on fire right now,” said Brian Jones, a New York-based senior U.S. economist at Societe Generale, told Bloomberg News. “You’ve got increased demand for workers, and the more people working, and the more money they are making, the more money they’ll spend.”
The ISM index rose after the new orders index rose to 66.7, the strongest level since April 2004, while the gauge of unfilled orders also advanced.
The data comes after last week’s report that indicated that the economy grew by 4.2 percent in the second quarter, compared with a contraction of 2.1 percent in the first quarter.
In a separate report, Markit Economics reported that its final U.S. manufacturing index jumped to 57.9, the strongest level since April 2010, compared with 55.8 the previous month, after factory employment and orders rose. A measure above 50 indicates growth.
The orders index grew to 60.5 in August from July’s reading of 59.5. Employment also grew strongly. The Markit survey involves at least 600 American manufacturing firms, with the rate of responses pegged at 85 percent to 90 percent.To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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