Manufacturing up, but employment lags: ISM

The manufacturing sector continued recovering in August from the sharp downturn caused by the COVID-19 pandemic, but employment lagged, according to the Institute for Supply Management’s (ISM) monthly manufacturing index.

“After the coronavirus (COVID-19) brought manufacturing activity to historic lows, the sector continued its recovery in August, the first full month of operations after supply chains restarted and adjustments were made for employees to return to work,” said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee.

The so-called PMI index came in at 56 percent, a 1.8 point increase from July and the fourth month of expansion in a row since April. Readings of more than 50 represent growth. But the index on employment came in at 46.4, continuing to contract despite a 2.1-point improvement over July.

Scott Murray, an economist at Nationwide, said the index was positive, all in all, and created hope for a more robust recovery.

“The gloom over the sharp downturn is the retreating in the rearview mirror as now more than 80 percent of industries are expanding,” Murray said.

“Employment continues to lag, but the slowdown of layoffs provides hope that firms are almost done right-sizing,” he added.

Some sectors continued to struggle due to the pandemic, such as aerospace equipment companies, office furniture and commercial office building suppliers and companies operating in oil and gas markets, according to Fiore.

Air travel has fallen precipitously since the pandemic began, and office usage has fallen as people have turned to work from home arrangements.