American Manufacturing Activity Reaches Highest Level in More Than 3 Years

A new Purchasing Managers’ Index (PMI) flash reading shows that the U.S. manufacturing index is at its strongest level in more than three years. Released by IHS Markit, the report shows a 56.6 PMI for May, compared to 56.5 for April. The former is the highest level the U.S. manufacturing industry has experienced since September 2014, attesting to its performance.

It’s important to note, however, that this is a flash reading. Basically, flash readings are performed more quickly than standard PMI readings. They usually involve about 80% to 90% of responses from manufacturers, allowing market researchers to create them more quickly.

As you may already know, PMI is a metric of the manufacturing industry’s health and robustness. It’s based on five criteria: new purchasing orders, inventory, production, deliveries and employment. To create the PMI, researchers send surveys to manufacturing companies throughout the country, asking them a variety of questions pertaining to the aforementioned criteria. After analyzing the responses, researchers determine an appropriate PMI reading for the manufacturing industry, with any reading over 50 signaling growth and expansion, whereas any reading under 50 signals contraction and shrinkage. Considering the U.S. manufacturing industry currently has a 56.6 flash reading for May, it appears to be going well.

When speaking about the manufacturing industry’s recent PMI flash reading, Chris Williamson, chief business economist at IHS Markit said it signals solid economic growth ranging between 2.5 to 3%, and that more than 200,000 jobs have been created in the manufacturing industry this summer alone. Whether or not this trend continues, however, remains to be seen. Inflation is rising, but the overall economy and job market appears to be doing well.

News of the manufacturing industry’s 56.6 PMI for May came at the same time President Trump announced big news for auto workers. “There will be big news coming soon for our great American Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!” said Trump.

So , what did President Trump mean when he made this announcement? Unfortunately, he didn’t provide any details, but many experts believe that Trump is working to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico. The countries have been working to come an agreement on NAFTA for several months now, but their efforts have been slowed due to disputes regarding the automotive industry. Perhaps President Trump has found a solution that will allow the United States to proceed with the renegotiations and promote a healthier U.S. manufacturing industry.