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ISM Manufacturing Index: US factory activity rose to highest level in 13 years in September

The AP reports “US factory activity rose to the highest level in 13 years last month as hurricanes disrupted supplies but drove up demand for manufactured goods.” The Institute for Supply Management (ISM) September manufacturing index “rose to 60.8 from 58.8 in August, the highest reading since May 2004.” According to the ISM, “new orders, production, and new export orders all grew faster in September.” Reuters  reports that despite “disruptions to the supply chains caused by Hurricanes Harvey and Irma,” the ISM findings “underscored the economy’s underlying momentum.” Survey respondents also “reported that customers’ inventories remained at levels considered ‘too low’ last month,” which the survey authors said indicated that “downstream customers continue to operate at a high level of demand that production cannot fully satisfy.” Bloomberg News  quotes ISM Survey Committee Chairman Timothy Fiore saying the “most direct impact from the storms was in the supplier deliveries index, indicating longer lead times; that gauge factors into the overall index,” while “survey respondents also mentioned that they received new orders because of the hurricanes, further boosting the headline number.” Bloomberg also points out that despite the hurricane-related disruption, “the nation’s producers had already been on firmer footing because of improving global demand and an increase in US. capital spending.” Dow Jones Newswires reports that the ISM September reading “exceeded economist expectations and suggests the factory sector is weathering the impact of three recent major Atlantic hurricanes – Harvey, Irma and Maria.” It quotes JP Morgan Chase Economist Daniel Silver saying, “even away from this index, many of the other survey components pointed to strength in the manufacturing sector, including increases in the measures of orders, production, and employment.” Investor’s Business Daily reports that “Wall Street economists expected the ISM gauge to ease to 58.0,” adding that “readings above 50 signal expansion.” MarketWatch reports that the ISM’s “index for new orders climbed 4.3 points to 64.6% and a measure of employment rose to 60.3%, the strongest reading since 2011.” However, MarketWatch adds that the survey also found “manufacturers in particular have had a harder time finding enough skilled workers.”

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