WASHINGTON — US factories expanded last month at the fastest pace since June 2011 on a jump in orders. The report signals that manufacturing output could strengthen in coming months.
The Institute for Supply Management, a trade group of purchasing managers, said Tuesday that its manufacturing index rose to 55.7 in August from 55.4 in July. That topped the index’s 12-month average of 52. A reading above 50 indicates growth.
A gauge of new orders rose nearly five points to 63.2, the highest level in more than two years. At the same time, production increased more slowly than in July, and factories added jobs at a weaker rate. Despite the drop, production reached its highest level in 2½ years.
The overall improvement contrasts with other recent reports that had pointed to a slowdown in manufacturing. The ISM’s survey found broad-based growth, with 15 out of 18 industries reporting expansion and only one reporting contraction.
The Federal Reserve will closely examine Tuesday’s report, which comes two weeks before Fed policy makers will decide whether to slow their bond-buying program.
The jobs report for August, to be released Friday, is the most important remaining report the Fed will consider.