US manufacturing unexpectedly picked up in September, showing American factories were a source of strength for the world’s largest economy before the federal government shut down.
The Institute for Supply Management’s factory index rose to 56.2, the strongest since April 2011, from 55.7 a month earlier, the Tempe, Arizona-based group’s report showed today.
Readings greater than 50 indicate growth.
Assembly lines hummed at companies from appliance and furniture makers to metals and transportation industries as the rebounds in housing and autos spurred growth.
To sustain the expansion, manufacturing must now overcome the budget gridlock in Washington that has led to the first partial government shutdown in 17 years, idling about 800,000 federal employees.
“You’re beginning to see a pickup in investment and stronger construction activity from the housing recovery, and those are important,” said Paul Ashworth, chief US economist at Capital Economics NA Ltd in Toronto and the best forecaster of the ISM index over the past two years according to data compiled by Bloomberg.
Still, the longer government agencies remain closed, “the more it might affect broader industry, and the private sector in general.”
The ISM report showed measures of production and employment expanded at a faster pace. While the orders gauge cooled, it showed the first back-to-back readings greater than 60 in more than two years.
Sustained gains in motor vehicle sales have been a source of strength for the nation’s factories. Car and light truck sales rose to a 16 million annualized pace in August, the fastest since November 2007, according to Ward’s Automotive Group.
