U.S. manufacturers growing at fastest pace in three years

Jul 05, 2017

ISM index rises to 57.8% in June; ‘business is strong’

American manufacturers are growing at the fastest pace in almost three years, reflected improved economic conditions both at home and abroad.

The Institute for Supply Management said its manufacturing index rose to 57.8% in June from 54.9%. That’s the highest reading since mid-2014 and well above the 55.6% forecast of economists surveyed by MarketWatch.

Readings over 50% indicate more companies are expanding instead of contracting. Some 15 of 18 industries tracked by ISM said they grew in June.

U.S. stocks held onto early gains after the release of the ISM report. The Dow Jones Industrial Average DJIA, +0.61%  was up more than 150 points.

New orders and production both rose sharply and employment plans hit the second highest level since 2011. The ISM reports on manufacturing and services are generally good harbingers of broader U.S. employment trends.

The U.S. government will issue June employment results on Friday. Economists polled by MarketWatch predict a 177,000 increase in new jobs. The unemployment rate is expected to hold steady at 4.3%.

“Overall, business is strong,” said an executive at a manufacturer of plastic and rubber products. “Business is still very robust,” said another executive at a computer maker.

The ISM index is compiled from a survey of executives who order raw materials and other supplies for their manufacturing companies. The gauge tends to rise or fall in tandem with the health of the broader economy.

Source: MarketWatch