Manufacturing activity in the U.S. reached a 13-year high in September, as strong demand and order growth rode out a severe hurricane season.
The Institute for Supply Management said Monday that its index of manufacturing activity climbed to 60.8 last month from 58.8 in August, hitting its highest reading since May 2004. A reading above 50 indicates sector expansion as measured by factors such as sales, output and hiring.
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The reading exceeded economist expectations and suggests the factory sector is weathering the impact of three recent major Atlantic hurricanes -- Harvey, Irma and Maria.
"The economy appears to have take the punch and rolled with it," Ian Shepherdson, chief economist at Pantheon Macroeconomics, said of the storm disruption.
The survey found "expanding business conditions, with new orders, production, employment, order backlogs and export orders all growing in September," the ISM said.
The initial storm impact showed up prominently in the ISM Prices Index, which jumped 9.5 percentage points on the month to 71.5, reflecting higher costs of raw materials like chemical products and metals.
It was also reflected in manufacturers' longer wait times, seen in a 7.3 percentage point jump in the Supplier Deliveries Index to 64.4, its highest level since July 2004.
"But even away from this index, many of the other survey components pointed to strength in the manufacturing sector, including increases in the measures of orders, production, and employment," J.P. Morgan Chase economist Daniel Silver said in a note to clients.
The survey reported concern among manufacturers about potential short-supply of products and higher prices in coming months.
Timothy Fiore, head of the ISM survey, said he expects residual impact on the sector over the next three to six months because of the hurricanes, but "overall, they are not going to change the fundamental factors of demand, and in fact could reflect increased demand because of the destruction element."
Manufacturing accounts for only about 12% of U.S. economic output, but the sector is closely watched for signals about the trajectory of the wider economy. Stronger growth overseas, high consumer confidence and a weaker dollar helped bolster factories' sales and hiring in recent months.
Consumer confidence declined in September but remained high, according to the University of Michigan's final reading of consumer sentiment. Households are expecting inflation to pickup in the next year, the survey said, a sign of a solid economy.
Write to Harriet Torry at email@example.com
(END) Dow Jones Newswires
October 02, 2017 13:23 ET (17:23 GMT)