Manufacture This

The blog of the Alliance for American Manufacturing

So says the latest ISM Index number.

Good news for people who like data-specific manufacturing news:

The ISM manufacturing index is high. Real high!

The Institute for Supply Management (ISM) for decades has been putting out a monthly survey of purchasing managers to gauge the relative health of manufacturing sector as they see it. Roughly speaking, a number below 50 means a pessimistic outlook, while a number above it means an optimistic one. The latest number (from August 2018) was 61.3 – the highest since May 2004. It suggests that American manufacturers are confident in the economy.

The Wall Street Journal, however, reports that it’s not all good news:

Despite the headline growth in factory activity, there are latent signs recent trade actions may be beginning to take a toll. An underlying gauge of new export orders for primary metals, transportation equipment and machinery declined in August, with machinery last declining at the beginning of 2017.

“We’re a significant exporter of railcars, airplanes, automobiles…Machinery is our number 6 industry sector,” said Tim Fiore, who oversees the ISM survey of factory purchasing and supply managers. “If export markets are closed off to us, orders will go down, [then] exports and production.”

Here are two things worth looking at to better gauge the health of American manufacturing industries:

Wages. Are they rising? It certainly doesn’t look like it right now, despite the Trump administration’s protests. 

Factory jobs. Is the economy making more of them? We’ll get a progress check on Friday when the next jobs report comes out.