The Institute for Supply Management reports that the headline PMI figure from its manufacturing report on business was a reading of 56.2 in September. This is a slight increase from the 55.7 reading in August, and indicates economic expansion in the manufacturing sector (reading >50) at a faster pace. This is also the highest the index has been since April 2011.
The September PMI figure was brought up by increases in inventories and employment, but down in new orders. All of the 5 leading diffusion indexes from ISM now suggest economic expansion in the manufacturing sector:
- New Orders: 60.5 from 63.2 last month.
- Production: 62.6 from 62.4 last month.
- Employment: 55.4 from 53.3 last month.
- Deliveries: 52.6 from 52.3 last month.
- Inventories: 50.0 from 47.5 last month.
The performance by industry:
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.
What the respondents are saying:
- “Global sales generally trending moderately higher.” (Textile Mills)
- “Slight increase in demand. Forecast looks better. 4Q looking better than 3Q — should begin to see demand increase in October/November.” (Food, Beverage & Tobacco Products)
- “Raw materials shortages continue. General trends are up, which enhances shortage issues.” (Wood Products)
- “Overall business is flat to down across the board.” (Machinery)
- “Housing continues to improve, resulting in improved conditions for our industry.” (Furniture & Related Products)
- “Rising costs of China labor has us re-evaluating our current position in that country.” (Computer & Electronic Products)
- “Steady increase in work this month.” (Primary Metals)
- “Overall business is picking up.” (Transportation Equipment)
- “Outlook remains strong with housing market and customer orders.” (Electrical Equipment, Appliances & Components)
- “Labor rates along the Gulf Coast are rising with the increased activity of construction and maintenance projects.” (Chemical Products)
Although this survey is considered the most important business manufacturing report, it is also important to pay attention to the regional manufacturing surveys published by the Federal Reserve banks. Currently, 4 out of 5 of those indicate economic expansion in the manufacturing sector.