Manufacturing failed to grow in September, according to the latest Institute for Supply Management Manufacturing Report On Business.
The Purchasing Managers Index indicates a significantly faster rate of decline in manufacturing during September, marking a departure from the 2008 trend toward negligible growth or contraction each month, according to ISM. This is the lowest level for the PMI since October 2001. This month’s report is showing prices rising at a much slower rate, as the Prices Index fell to the lowest level in 21 months. Export orders continued to increase, but at a slower rate than in August.
The six industries reporting growth in September — listed in order — are: Petroleum &Coal Products; Paper Products; Food, Beverage &Tobacco Products; Miscellaneous Manufacturing; Computer &Electronic Products; and Chemical Products. The industries reporting contraction in September are: Nonmetallic Mineral Products; Textile Mills; Wood Products; Furniture &Related Products; Apparel, Leather &Allied Products; Machinery; Transportation Equipment; Primary Metals; Fabricated Metal Products; Printing &Related Support Activities; Plastics &Rubber Products; and Electrical Equipment, Appliances, &Components.
Some of what respondents said in the survey:
- We have experienced a larger-than-expected slowdown in orders during the last month.” (Electrical Equipment, Appliances &Components)
- “Steel, a main raw good for our business, has finally started showing some signs of softening a bit.” (Machinery)
- “Business continues to slow down. Fourth quarter 2008 is going to be down 15 percent from third quarter.” (Fabricated Metal Products)
- “Customers waiting for material price reductions in the face of falling oil prices.” (Plastics &Rubber Products)
- “Continued strong export demand across several product lines.” (Chemical Products)
Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, said: “The September ISM index reading of 43.5 is a sudden and substantial decline from the 49.9 reading the prior month. The manufacturing industry has been in recession since October of 2007 and has seen moderate declines in production until recently. A broad-based and deep fall in the September report indicates that the energy shock, housing collapse, and financial crisis has reached a point where the recession has spread to the general economy.
“Spring 2008 tax rebates provided only temporary relief, as they were designed, but did nothing to correct the underlying problem of over-indebted households, falling housing and stock market prices, and an overleveraged financial system. Unfortunately, we do not expect any recovery in manufacturing activity until mid 2009.”
More details here.
