The American manufacturing industry ended January on a strong note, growing at its near-fastest pace in more than a decade. According to the Institute of Supply Management (ISM), the industry closed the first month of 2018 with a Manufacturing Index of 59.3. Previous estimates had suggested the industry would close with a 59.1 index. Any Index over 50 indicates growth and expansion, whereas any Index below 50 indicates contraction and shrinkage.
While these numbers are certainly strong, it still falls short of the American Manufacturing industry’s reading for September 2017. Back then, the ISM gave the industry’s factory activity a Manufacturing Index of 60.2. That was the highest reading since 2004. Normally, this sector has an average reading of 57.4. Therefore, September was a particularly strong month for manufacturing factory activity.
So, what do these number mean exactly? The Manufacturing Index is a reading of the industry’s health. Developed and performed by the ISM, it involves a massive survey of more than 300 of the country’s leading manufacturing firms. In this survey, respondents are asked a variety of questions regarding their organization’s activities, including whether they are receiving more or less orders; supplier deliveries; imports and exports; and more. The Manufacturing Index survey involves questions from 19 individual categories. The composite Manufacturing Index is then calculated by taking 20% weighting in five of the most important categories.
Every month, the ISM releases a new Manufacturing Index to help manufacturing companies and investors alike better gauge the overall health of the country’s manufacturing sector.
The latest report from the ISM suggests the country’s manufacturing industry is a growing at a fast pace. Hovering just under 60, January was almost the fastest the industry has grown since 2004. There are a few reasons for the industry’s strong growth, one of which is President Trump’s focus to strengthen the manufacturing sector. According to Breitbart, President Trumps’ renewed promise to strengthen the industry is reflected upon these latest ISM Manufacturing Index readings.
The high Manufacturing Index by the ISM isn’t the only good news for American workers. In January, the U.S. Department of Labor (DOL) released a report in which it revealed that manufacturing companies grew at a 5.7% pace in Q4 2017. To put that number into perspective, that was the fastest pace at which the industry has grown in any single quarter since 2010. All of these signs point towards a healthy, growing manufacturing industry. And with a focus on “buy American, hire American,” we’ll likely see this trend continue for quite some time.