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Hurricanes Harvey, Irma lift U.S. factory activity index to 13-year high

Monday, Oct 02 2017
Hurricanes Harvey, Irma lift U.S. factory activity index to 13-year high

A measure of U.S. manufacturing activity surged to a near 13-1/2-year high in September as disruptions to the supply chains caused by Hurricanes Harvey and Irma resulted in factories taking longer to deliver goods and boosted raw material prices. Still, details of the Institute for Supply Management’s (ISM) survey on Monday underscored the economy’s underlying momentum, with factories reporting stronger order growth last month. A measure of factory employment hit its highest level since 2011. ISM said its index of national factory activity surged to a reading of 60.8 last month, the highest reading since May 2004, from 58.8 in August. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy.

The ISM said Harvey and Irma had caused supply chain and pricing issues in the chemical products sector. There were also concerns about the disruptive impact of the storms on the food, beverage and tobacco products industries. Manufacturers of nonmetallic mineral products said while the storms were boosting sales, they were also causing significant price increases on input raw materials. As a result, the ISM’s supplier deliveries sub-index soared 7.3 points to 64.4 last month. A lengthening in suppliers’ delivery time is normally associated with increased activity, which is a positive contribution to the ISM index.

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