WASHINGTON — U.S. factories expanded at a
brisk pace in August, a likely sign of strength for the U.S. economy as new
orders, production and employment all improved.
The Institute for Supply Management said
Friday that its manufacturing index rose to 58.8 percent last month from 56.3
percent in July. Anything above 50 signals that factory activity is increasing.
The measure now stands at its highest level
since April 2011, pointing to solid economic growth.
Fourteen of 18 manufacturing industries
surveyed by ISM posted growth in August, including the machinery, petroleum and
coal products, and computer and electronic products sectors.
August was “a really strong month,” Timothy
Fiore, chair of ISM’s manufacturing business survey committee, said in a
telephone interview. He noted that the growth was mostly driven by the top
manufacturing sectors.
It’s early to predict the impact on the
oil, gas and chemical industries and on the broader economy of Hurricane
Harvey. But Fiore said a snap survey of ISM members showed there likely will be
a significant hit to the petroleum and chemical products sectors and “lots of
supply chain disruptions.”
Refining capacity, chemical raw materials and the ability to deliver products all have been drastically affected by the
storm that lashed Houston and nearby areas and shut down oil refineries,
plastics plants and the Houston port — the second-busiest in the nation. There
have been widespread reports of gasoline shortages.
The chemical products sector is one of the
six biggest manufacturing industries, accounting for 17 percent of total
activity, Fiore noted. Petroleum and coal, also among the “Big Six,” account
for 7 percent. Texas represents more than 10 percent of U.S. manufacturing
production. Chemical products refining in the state accounts for 20 percent of
the U.S. total, and oil and gas represents 30 percent.
U.S. factories have largely recovered from
a slump in late 2015 and early 2016 caused by cutbacks in the energy industry
and a strong dollar, which makes U.S. goods more expensive in foreign markets.
Manufacturing employment began a sustained turnaround in December and enjoyed
four additional months of job gains, only to have factories shed 1,000 workers
in May.
New government data issued Friday showed
that manufacturing was one of the leading sources of U.S. job growth in August,
adding 36,000.
For August, the manufacturing production
component of the ISM index rose 0.4 point to a reading of 61 in August.
Employment climbed 4.7 points to 59.9 percent. The component of prices for raw
materials was unchanged at 62 percent.
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