Manufacturing Growth Stalls

Manufacturing activity slipped in September but still marked a second straight month above contraction levels the Tempe, AZ-based Institute for Supply Management’s (ISM) reported. ISM said their manufacturing index reading of 52.6 missed estimates from economists, who expected a jump to 54 from August’s 52.9, according to a Briefing.com consensus survey. (Index readings above 50 indicate growth, while levels below 50 signal contraction.)

August’s report snapped 18 straight months of contraction in the sector. The monthly report is a national survey of ISM members, who are purchasing managers in the manufacturing field. Readings below 41.2 are associated with a recession in the broader economy.

The data tracks new orders, production, employment, supplier deliveries, inventories, customers’ inventories, the backlog of orders, prices, new export orders, imports and buying policies.

Of the 18 manufacturing sectors reporting, 13 posted growth — including categories such as apparel, transportation equipment and paper products. Sectors reporting contractions included furniture, plastics and machinery.

The key new orders component fell by 4.1% in September, to 60.8. New orders are a gauge of manufacturing activity in the near future. Despite the slip from August, this is the third consecutive month signaling growth in new orders. A reading above 48.8, over time, is generally consistent with an increase in the Census Bureau’s data on manufacturing orders.