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US manufacturers saw clear gains in August following the devastation of the coronavirus shutdowns earlier in the year, though damage from the downturn lingers, according to an industry survey Tuesday.
The Institute for Supply Management’s (ISM) manufacturing index rose more than expected last month to 56 percent from 54.2 percent in July, with key metrics continuing their expansion after business shutdowns caused by Covid-19 badly hit factories earlier this year.
“Index and sub-index expansion was stronger than July, but we are still recovering from historically low levels of activity,” ISM manufacturing survey chair Timothy Fiore told reporters.
“I don’t believe we’re back where we were pre-virus across the manufacturing sector,” Fiore said, but, “I think we’re on a good path.”
US manufacturing saw 131 consecutive months growth that ended in April when the downturn began, but has since picked up.
Fiore said August was the first full month where supply chains were reactivated and employees were back in the workplace, though many companies had put in place social distancing measures to guard against infection.
The key new orders component jumped 6.1 percentage points to 67.6 percent, while production gained slightly to 63.3 percent. Any reading above 50 percent indicates expansion.
Prices climbed 6.3 points to 59.5 percent, while new export orders also gained to 53.3 percent.
“Current sales to domestic markets are substantially stronger than forecasted. We expected a recession, but it did not turn out that way,” a fabricated metal products company told ISM.
However, the data showed lingering damage from the virus’s dramatic economic effects.
Employment was at 46.4 percent, up only 2.1 points from July, and Fiore acknowledged that hiring “is going to be a bit murky for a while.”
Fiore also warned that key sectors representing about 20 percent of the total US manufacturing output — aerospace equipment, oil and gas firms and office furniture and office building suppliers — would face low demand through the end of the year.
“Recovery in manufacturing is continuing though output remains subdued compared to pre-pandemic levels,” Rubeela Farooqi of High Frequency Economics said in an analysis.
“The outlook remains dependent on the path of the virus, which can disrupt activity, as well as recovery in global demand.”
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