US ISM manufacturing PMI hits 14-year high in August
The pace of US factory sector activity accelerated last month, according to the findings of a key survey, hitting a 14-year high.
Many survey respondents, including those from the Chemical Products and Transportation Equipment sectors, indicated that they were seeing strong demand, with some adding that uncertainty about the potential impact and expected duration of trade tariffs was affecting their business.
The Institute for Supply Management's manufacturing sector Purchasing Managers' Index jumped from a reading of 58.1 for July to 61.3 in August, beating economists' projections for a dip to 57.6.
New orders were particularly strong, with the corresponding sub-index rising by 4.9 points to a reading of 65.1, alongside an increase in another linked to production from a reading of 58.5 for July to 63.3 in August.
A separate gauge tracking prices paid meanwhile slipped, from a reading of 73.2 to 72.1.
"We have seen a slight uptick in international business. Suppliers do not seem to know how to handle the recently imposed tariffs. Most are waiting to re-evaluate potential price increases until September," said one survey respondent from the Computer&Electronic Products sector.
Another respondent, from the Fabricated Metal Products sector, said: "The toughest thing we deal with is the unknown. Dealing with tariffs on steel purchases and not knowing if or when they will end makes planning difficult. We are entering the period when we begin our pricing negotiations for next year and will likely treat the tariffs as if they will be here for the entire year. It’s challenging, but not insurmountable."
Commenting on Tuesday's data, Ian Shepherdson at Pantheon Macroeconomics said: "Overall, this is a very strong report, though manufacturing sentiment will be sorely tested if the administration follows through its threat hugely to expand tariffs on Chinese imports. For now, though, the sector is in very good shape."