August NAPM Index Stronger Than Expected

By BridgeNews A key barometer of the health of the U.S. manufacturing economy rose in August from July but continued to show contraction for the 13th consecutive month by coming in under the 50% break-even point at 47.9%. It was 43.6% in July. "The manufacturing sector continued to decline in August as has been the trend since August 2000. However, the rate of decline decelerated significantly during the month," says the latest Manufacturing NAPM Report On Business. The monthly report is issued by the National Assn. of Purchasing Management. Both production and new orders showed marked improvement and recorded impressive growth after a lengthy period of decline -- providing encouragement that a number of industries are starting to recover, the report said. NAPM's manufacturing employment index fell below 50% in August for the 11th consecutive month. The index registered 40.8% in August compared with 37.2% in July, an increase of 3.6 percentage points. There were no reports of higher employment in any of the sectors during the month. The price index indicated manufacturers paid lower prices in August. With the index at 33.9%, the report said it marks the sixth consecutive month the index has been below 50%. The index is 4.8 percentage points lower than July's 38.7%. In August, 6% of purchasing and supply executives reported paying higher prices and 34% reported paying lower prices, while 60% reported that prices were unchanged from the preceding month. The new orders index was at 53.1%, up 6.8 percentage points compared with July's 46.3%. The inventories index was at 37.7% indicating a slightly slower rate of inventory liquidation when compared with July's 35.8%. Responding to a special monthly question concerning customers' inventories of products purchased from the their organizations, 13% of the purchasing and supply executives felt they were too high (up from 9% in July), while 16% felt they were too low (down from 19% in July), and 71% thought they were about right (down from 72% in July). "The overall picture is one of continued decline in manufacturing activity during the month of August," the report said. The production index was 52.2% in August, up from 46.4% in July, marking the first month that the index has risen above 50% after eight months of decline.

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