ISM Manufacturing Index Surges

Surging growth in new orders leads an unexpectedly hot ISM manufacturing index for August, at 61.3 to easily top Econoday's high forecast by more than 3 points. New orders, at 65.1, are up nearly 5 points to signal the strongest rate of month-to-month growth since January this year with export orders showing solid and steady growth at 55.2. Backlogs rose at a faster rate, at 57.5 vs July's 54.7, which is typically a plus for employment which gained 2.0 points to 58.5.

Production was also very strong in the month, up 4.8 points to 63.3 which is also the highest reading since January. Capacity stress is evident with delivery times extremely elevated as are input costs which, at 72.1, have nevertheless been easing from May's peak at 79.5. Despite delivery delays, inventories of raw materials posted a noticeable rise with a smaller rise for inventories of finished goods.

Eighteen of 16 industries tracked in ISM's sample posted composite monthly expansion with the exception of wood products and, for a second month in a row, primary metals where import tariffs are in play.

The run of small sample surveys are mixed for August though the standout gains for this report may tilt expectations higher for the month's government data out of the factory sector which will open with next week's industrial production report from the Federal Reserve.