Key facts
- US manufacturing expanded for the ninth straight month in September.
- ISM Manufacturing PMI fell to 54.5%, below the 54.8% forecast.
- New Orders Index rose to 55.3%, while Production Index fell to 56.7%.
- Manufacturing employment increased, with the Employment Index at 52.7%.
- The Prices Index jumped to 77.9%, indicating increased price pressures.
US manufacturing activity continued to expand in September, though at a slightly slower pace than the previous month. The Institute for Supply Management (ISM) reported its Manufacturing PMI at 54.5%, falling short of the 54.8% forecast and down from August's 54.6%. This marks the ninth consecutive month of expansion for the sector, with readings above 50% indicating growth.
Demand signals remained positive, with the New Orders Index increasing to 55.3% from 53.7% in August, and the Backlog of Orders Index rising to 56.4% from 51.8%. However, production growth moderated, as indicated by the Production Index falling to 56.7% from 58.3%, though it still represents 11 months of expansion.
Manufacturing employment showed strength, with the Employment Index climbing to 52.7% from 51.2% in August. Price pressures intensified significantly, with the Prices Index jumping 6.8 percentage points to 77.9%, up from 71.1% in the prior month. Susan Spence, ISM survey chief, noted that pricing volatility was mentioned in 46% of negative comments, with tariffs and the Iran war also cited.
Overall, 12 of the 18 manufacturing industries reported growth in September. Major expanding industries included computer and electronic products, transportation equipment, machinery, chemicals, and food and beverage products. Inventories saw a slight contraction, falling to 48.6% from 50.6%, while new export orders declined to 50.9% from 53.2%.