The weather may be cooling off, but today's ISM Manufacturing report for August came in hot. While economists were expecting the headline reading to come in at a level of 56.5, the actual reading came in at 58.8. That's the highest reading since April 2011! It may not be the largest share of the US economy, but the manufacturing sector is on fire.
The commentary in this month's report was even stronger than the numbers. Below, we show the "What Respondents Are Saying" section from the ISM report, and all the adjectives are positive.
Among the report's sub-components, on both a month-over-month and year-on-year basis, breadth was strong. Relative to July, five components were stronger while four declined. One of the highlights this month was Employment, which spiked to its highest level since June 2011 (chart below). While the monthly employment report for August was weaker than expected, that component's strength in the ISM report helps to offset that weakness. On a y/y basis, the only component that declined was Customer Inventories. At a level of 41.0, that component is now at its lowest level since April 2011 (chart below).