Manufacturing Expands in September for Fourth Consecutive Month - Modern Distribution Management

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Manufacturing Expands in September for Fourth Consecutive Month

September's PMI reading of 56.2 is the highest of the year.

Economic activity in the manufacturing sector expanded in September for the fourth consecutive month, and the overall economy grew for the 52nd consecutive month, according to the latest Manufacturing ISM Report on Business.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee. The PMI registered 56.2 percent, an increase of 0.5 percentage point from August's reading. September's PMI reading is the highest of the year, leading to an average PMI reading of 55.8 percent for the third quarter.

The New Orders Index decreased in September by 2.7 percentage points to 60.5 percent, and the Production Index increased by 0.2 percentage point to 62.6 percent. The Employment Index registered 55.4 percent, an increase of 2.1 percentage points compared to August's reading of 53.3 percent, which is the highest reading for the year. Comments from the panel were generally positive and optimistic about increasing demand and improving business conditions, according to the report.

Of the 18 manufacturing industries, 11 are reporting growth in September in the following order: electrical equipment, appliances & components; food, beverage & tobacco products; furniture & related products; petroleum & coal products; fabricated metal products; paper products; printing & related support activities; transportation equipment; computer & electronic products; machinery; and plastics & rubber products. The six industries reporting contraction in September – listed in order – are: apparel, leather & allied products; primary metals; textile mills; nonmetallic mineral products; miscellaneous manufacturing; and chemical products.

One respondent in the computer & electronic product industry said rising costs of labor in China has caused their company to re-evaluate its current position in the country. Another respondent, in the chemical products industry, also had labor cost concerns. "Labor rates along the Gulf Coast are rising with the increased activity of construction and maintenance projects," the respondent said.

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