America’s factories are roaring back. But the economy is still far from a full recovery

It’s been exactly one year since America’s manufacturing sector dived into a recession on the back of US-China trade conflict. The recession lasted five months, but factories have roared back since. America’s manufacturers reported their best momentum in nearly two years on Tuesday.

The mood in the industry hasn’t been this good since November 2018, the Institute of Supply Management’s August survey showed.

The ISM’s purchasing managers’ index stood at 56 in August, better than economists expected. Any number greater than 50 denotes an expansion in the sector.

And, even better, the index for new orders climbed to 67.6, its highest level since January 2004.

Last August, the PMI dropped below 50 for the first time in three years, and fell to its lowest level in more than 3.5-years as factories grappled with the fallout from President Donald Trump’s trade war. The industry recovered in January, just in time for the pandemic to put a damper on growth.

“After the coronavirus 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, the chair of the ISM Manufacturing Business Survey Committee, about the August report.t’s easy to forget that the economy is still far from

With numbers like these it may be hard to remember that the economy is far from being back to normal.

In spite of the rebound across economic data, the Federal Reserve keeps warning that the path of the recovery is ultimately tied to the path of the virus: as long as the pandemic isn’t over or fully under control, the economy can’t go back to what it was before.

With schools reopening, flu season around the corner and Congress unable to agree on another stimulus package, there are many unknowns going into the fall.

“Time will tell if companies should be more vigilant about expansion plans and limit inventories and capex in the current environment where the economic outlook remains highly uncertain,” said Chris Rupkey, chief financial economist at MUFG.

“The economy isn’t back to normal regardless of what these upbeat surveys of purchasing manager executives are telling us,” he added.