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Economic activity in the manufacturing sector contracted in September, and the overall economy grew for the 125th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.
According to Timothy R. Fiore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee, the September PMI® registered 47.8%, a decrease of 1.3% from the August reading of 49.1%. The New Orders Index registered 47.3%, an increase of 0.1% from the August reading of 47.2%. The Production Index registered 47.3%, a 2.2% decrease compared to the August reading of 49.5%. The Employment Index registered 46.3%, a decrease of 1.1% from the August reading of 47.4%. The Supplier Deliveries Index registered 51.1%, a 0.3% decrease from the August reading of 51.4%. The Inventories Index registered 46.9%, a decrease of 3% from the August reading of 49.9%. The Prices Index registered 49.7%, a 3.7% increase from the August reading of 46%. The New Export Orders Index registered 41%, a 2.3% decrease from the August reading of 43.3%. The Imports Index registered 48.1%, a 2.1% increase from the August reading of 46%.
“Comments from the panel reflect a continuing decrease in business confidence. September was the second consecutive month of PMI® contraction, at a faster rate compared to August. Demand contracted, with the New Orders Index contracting at August levels, the Customers’ Inventories Index moving toward ‘about right’ territory and the Backlog of Orders Index contracting for the fifth straight month (and at a faster rate). The New Export Orders Index continued to contract strongly, a negative impact on the New Orders Index. Consumption (measured by the Production and Employment indexes) contracted at faster rates, again primarily driven by a lack of demand, contributing negative numbers (a combined 3.3% decrease) to the PMI® calculation. Inputs — expressed as supplier deliveries, inventories and imports — were again lower in September, due to inventory tightening for the fourth straight month. This resulted in a combined 3.3% decline in the Supplier Deliveries and Inventories indexes. Imports contraction slowed. Overall, inputs indicate supply chains are meeting demand and companies are continuing to closely match inventories to new orders. Prices decreased for the fourth consecutive month, but at a slower rate.
“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019. Overall, sentiment this month remains cautious regarding near-term growth,” says Fiore.
Of the 18 manufacturing industries, three reported growth in September: Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Chemical Products. The 15 industries reporting contraction in September — in the following order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Wood Products; Electrical Equipment, Appliances & Components; Textile Mills; Paper Products; Fabricated Metal Products; Plastics & Rubber Products; Petroleum & Coal Products; Primary Metals; Transportation Equipment; Nonmetallic Mineral Products; Machinery; Furniture & Related Products; and Computer & Electronic Products.
See the July report here.