September manufacturing output remained in contraction territory for the sixth consecutive month, according to the new edition of the Manufacturing Report on Business, which was issued today by the Institute for Supply Management (ISM).
The report’s benchmark reading, the PMI, at 47.2 (a reading of 50 or higher indicates growth), matched August. ISM added that the PMI has not seen growth in 22 of the last 23 months, with the overall economy growing, at the same rate, for the 53rd consecutive month.
The September PMI is 0.8% the 12-month average of 48.9, with March’s 50.3 marking the high over that period, and November 2023 marking the lowest, at 46.6.
ISM reported that five manufacturing sectors grew in August, including: Petroleum & Coal Products; Food, Beverage & Tobacco Products; Textile Mills; Furniture & Related Products; and Miscellaneous Manufacturing. The 13 industries contracting included: Printing & Related Support Activities; Plastics & Rubber Products; Wood Products; Apparel, Leather & Allied Products; Primary Metals; Transportation Equipment; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Paper Products; Machinery; Chemical Products; Fabricated Metal Products; and Computer & Electronic Products.
The report’s key metrics were mostly down in August including:
- New Orders, which are considered the engine that drives manufacturing, increased 1.5%, to 46.1, contracting, at a slower rate, for the sixth consecutive month, with two sectors reporting growth, and the category seeing no steady growth since a 24-month growth period through May 2022;
- Production, at 49.8, rose 5.0%, contracting, at a slower rate, for the fourth consecutive month, with five sectors reporting growth;
- Employment, at 43.9, was down 2.1%, contracting, at a faster rate, for the fourth consecutive month, which was preceded by seven months of contraction, with two sectors reporting growth, for its lowest reading since July 2020’s 43.7; February 2023’s 45.9, and July 2023’s 45;
- Supplier Deliveries, at 52.2 (a reading above 50 indicates contraction), were up 1.7% compared to August, slowing, at a faster rate, with eight sectors reporting slower deliveries;
- Backlog of Orders, at 44.1, were up 0.5% compared to August, which was the lowest monthly reading since November 2023, contracting, at a slower rate, for the 24th consecutive month, after 27 months of growth, with two sectors growing;
- Prices, at 48.3, fell 5.7%, decreasing after eight months of gains, with seven sectors reporting they paid higher prices;
- Inventories, at 43.9, decreased 6.4%, following growth in August, which snapped an 18-month stretch of contraction, with one sector reporting higher inventories; and
- Customers’ Inventories, at 50.0 up 1.6%, %, moving “about right,” from “too low” in August, with four sectors reporting higher customers’ inventories
“U.S. manufacturing activity contracted again in September, and at the same rate compared to last month,” wrote , Tim Fiore, Chair of the ISM’s Manufacturing Business Survey Committee, in thew report. “Demand continues to be weak, output declined, and inputs stayed accommodative. Panelists cited continuing efforts by their companies to right-size workforces to levels consistent with projected demand. Inputs — defined as supplier deliveries, inventories, prices and imports — generally continued to accommodate future demand growth, with inventories returning to low levels and suppliers showing some difficulty in meeting customer needs.”
