An index of US manufacturing activity grew at its fastest pace in four months in September because of strong demand for industrial products and rising inventories.
The Institute for supply Management (ISM) manufacturing index rose to 61.1 in September from 59.9 in August, according to data released on Friday. An index above 50 indicates expansion of activity. The median forecast by economists is 59.5.
The data show that manufacturers have made progress in their efforts to digest the backlog of orders, but shipping challenges have not been eliminated and delivery is still delayed. However, strong consumer demand and business investment should continue to support manufacturing growth in the coming months.
A measure of backlog order growth fell to its lowest level in three months, while the ISM index of new orders remained solid at 66.7. Production growth slowed slightly, but factory inventory indicators grew at their fastest pace since October 2010.
At the same time, the transportation of raw materials and manufactured goods remains a major problem for manufacturers. The backlog at ports is at a record high, freight companies and railways face bottlenecks and the cost of shipping containers soars. The ISM supplier delivery index rose to a three-month high, while the ISM input price index also rose.