U.S. Manufacturing Powers Ahead

American factories powered up in June at the fastest pace in nearly three years, with robust advances in production, orders and employment that indicate a firming in the economy, data from the Institute for Supply Management showed Monday.

HIGHLIGHTS OF ISM MANUFACTURING (JUNE)

  • Factory index rose to 57.8, highest since August 2014 (est. 55.3) from 54.9 in May; readings above 50 indicate growth

  • ISM’s gauge of new orders increased to three-month high of 63.5 from 59.5

  • Measure of production picked up, while employment gauge climbed to the second-highest level since 2011

Key Takeaways

Faster growth in orders and production in the final month of the quarter indicates solid demand that, together with rising exports, shows manufacturing is on solid footing. The ISM’s pulse of employment in the industry also indicates the government’s measure of factory payrolls, released as part of the Labor Department’s jobs report on Friday, will rebound in June after declining a month earlier.The expansion was broad based, with 15 of 18 industries surveyed by the purchasing managers’ group posting growth in June. They included machinery, transportation equipment, computer and electronic products, and petroleum and coal products. The three reporting contractions were apparel, textile mills and primary metals.The 2.9-point monthly gain in the ISM index, which was the largest jump since early 2013, is also notable as it comes amid fading expectations that the government will deliver a fiscal boost, via tax reform and infrastructure spending, in the near future.

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