Manufacturing Sector Growth Surges

Improvement Due To Rise In New Orders

Manufacturing Sector GrowthGrowth in the manufacturing sector surged in August, with a barometer of factory productivity rising to its highest level in two years. The Institute for Supply Management's (ISM) Index, which is closely watched by economists, rose from 55.4 in July to 55.7 last month. Beating the predictions of analysts who forecast a reading of 54, the August tally was the index's highest since June 2011. A reading above 50 indicates the sector is growing, presenting a potential market opportunity for distributors.

ISM data shows that improvement in the manufacturing sector last month was the result of a rise in new orders. The Tempe, AZ-based group's new orders index increased to 63.2, the highest level since April 2011. August marked the third straight month that manufacturing in the U.S. expanded. The sector accounts for 12% of the American economy.

Orders from overseas also picked up in August, which furthers evidence that economic improvement in Europe and Asia are fueling manufacturing gains in the U.S. Europe officially emerged from a six-quarter recession in Q2, while a private survey of manufacturers showed production in China grew after contracting for three straight months.