The Institute for Supply Management (ISM) said on Tuesday its
index of national factory activity increased to a reading of
56.0 last month from 54.2 in July. That was the highest level
since November 2018 and marked three straight months of growth.
A reading above 50 indicates expansion in manufacturing, which
accounts for 11% of the U.S. economy. Economists polled by
Reuters had forecast the index would rise to 54.5 in August.
But the continued improvement in manufacturing is uneven, as the
COVID-19 pandemic shifts spending away from equipment used in
the services industries such as restaurants and bars to
purchases of goods like home electronics.
The ISM's forward-looking new orders sub-index increased to a
reading of 67.6 in August, the strongest since December 2017,
from 61.5 in July. The survey's measure of order backlogs at
factories accelerated as did orders for exports.
Though factory employment continued to improve last month, it
remained in contraction territory. The ISM's manufacturing
employment measure rose to a reading of 46.4 from 44.3 in July.
Factory employment was already in decline before the coronavirus
crisis because of the Trump administration's trade war with
China. Its struggle to rebound even as orders received by
factories are rising fits in with economists' views that the
labor market was losing steam after being boosted by the
reopening of businesses in May.
The government's closely followed employment report to be
released on Friday is expected to show 1.4 million jobs created
in August after adding 1.763 million in July, according to a
Reuters survey of economists. That would leave nonfarm payrolls
about 11.5 million below their pre-pandemic level.
(This story corrects historical in headline, first and second
paragraphs and adds dropped words)
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)
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