Northwest Arkansas Democrat-Gazette
Factory index hits 13-year high
Hurricanes said to disrupt supply chains, drive up demand
WASHINGTON — U.S. factory activity last month rose to the highest level in 13 years as hurricanes disrupted supplies but drove up demand for manufactured goods.
The Institute for Supply Management, a trade group of purchasing managers, said its manufacturing index rose to 60.8 from 58.8 in August, the highest reading since May 2004. Anything above 50 signals that manufacturers are growing, and the survey shows they’ve been on a 13-month winning streak.
Production, hiring and new orders, including export orders, all grew faster in September.
Seventeen of 18 manufacturing industries reported growth, led by textile mills and machinery. Only one industry — furniture manufacturing — contracted last month.
The Institute for Supply Management also reported a rise in its measure of exports as factories are benefiting from a strengthening global economy and a drop this year in the value of the U.S. dollar against other major currencies. A weaker dollar makes U.S. products less expensive in foreign markets.
Some industries reported that Hurricanes Harvey and Irma had disrupted supplies and driven up costs.
Timothy Fiore, chairman of the Institute for Supply Management’s manufacturing survey committee, said the scramble for supplies for rebuilding in the aftermath of the hurricanes may have driven manufacturing activity
higher in September. Factories, he said, “are really struggling to meet demand.”
Fiore said during a conference call that the most direct effect from the storms was in the supplier deliveries index, indicating slower deliveries; that gauge factors into the overall index.
While the increase in factory
bookings and production may reflect a bounce-back from the storm, the nation’s producers had already been on firmer footing because of improving global demand and an increase in U.S. capital spending.
Orders will probably remain strong in the coming months, as a gauge of customer inventories held close to a sixyear low. In addition, the Institute for Supply Management’s order backlog index crept up
to the highest level since April 2011, helping explain why more factories are stepping up hiring.
The overall U.S. economy expanded at a 3.1 percent annual pace from April through June, the fastest rate in more than two years. Unemployment, at 4.4 percent, is near a 16-year low.