U.S. manufacturing sector expands for 7th month

TEMPE, Ariz. – The U.S. manufacturing sector expanded in August for the seventh consecutive month, though the rate of growth was the slowest in five months, according to a report today from the Institute for Supply Management.
The PMI – a composite index formerly known as the Purchasing Managers’ Index – fell 0.9 percentage points to 52.9 percent, the institute said in its monthly Manufacturing ISM Report on Business. The slowing was sharper than expected, according to a Bloomberg News survey of 81 economists, whose median forecast called for the index to dip to 53.0 percent from its June level of 53.8 percent.
(A PMI of 50 percent indicates equal numbers of manufacturers surveyed indicated advances and declines in their business; higher readings indicate the manufacturing economy is expanding. Last year, the index averaged 53.9 percent.)
“Viewed from the manufacturing sector, the overall economy continues to grow at a significant rate,” wrote Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee. “In comparing August to July, the rate of growth in manufacturing was slightly less but continues the expansion, although at the slowest pace in the past five months. Both the New Orders Index and the Production Index are encouraging for continuing growth as we head toward the fourth quarter of 2007.”
The ISM’s new orders index declined to 55.3 percent last month from 57.5 percent in July, but the index of export orders rose to 57.0 percent from July’s 56.5.
The report, one of the first to show the effects of the mortgage-industry crisis, may ease policymakers’ concerns, Bloomberg News said.
“At least the manufacturing sector looked pretty robust in August,” Julia Coronado, a senior economist at Barclays Capital Inc. in New York, told Bloomberg. “The sector looks pretty healthy overall, basically holding steady. The details actually look fairly reassuring.”
The Institute for Supply Management, the publisher of Inside Supply Management magazine, produces monthly Reports on Business for the manufacturing and non-manufacturing sectors. Additional information is available at www.ism.ws.