US manufacturing activity accelerates in August

The key US manufacturing sector accelerated in August at its fastest pace in six years, driven by gains in output and employment, the Institute for Supply Management (ISM) said Friday.

However, Hurricane Harvey is likely to take a toll in coming months after devastating the top exporting state in the country, which contains 10 percent of US manufacturing GDP, according to the ISM survey.

The closely-watched ISM purchasing managers survey showed all six of the "big six" industries -- representing 70 percent of manufacturing GDP -- accelerating activity last month.

But the strong numbers mean that supply chains are stretched and labor shortages continue, said Timothy Fiore, chair of ISM's Manufacturing Business Survey Committee.

The monthly purchasing managers index rose 2.5 points to 58.8, its fastest rate of expansion since April 2011. This reflects a jump in employment to its highest level since June 2011, as well as rising inventories, and a modest increase in production.

Other categories like exports and new orders continue to grow strongly, although at a slower pace than in July, the report showed.

While the price index was flat, it remains at a high level with all but two industries reporting paying increased prices for raw materials last month.

"Price pressures continue in many segments," Fiore told reporters in a conference call.

ISM conducted a special hurricane survey due to the importance of Texas and the Gulf of Mexico region to manufacturing. The region is home to 20 percent of the chemical industry -- the nation's biggest sector -- and 30 percent of petroleum and coal.

Fiore said respondents anticipate "energy impacts seen throughout the United States," and other negative effects for the next three months, including on material deliveries and higher prices.

However, six months out they see the hurricane "as having a positive impact in the area of production, in the area of new orders and in the area of employment."

But he noted that some of the industries concentrated in Texas require specialized skills that will need to be shipped in from other areas of the country.