ISM Manufacturing PMI Holds Near Steady at 54.5% in September

The Manufacturing Purchasing Managers Index registered 54.5% in September, 0.1 percentage point below the August figure of 54.6%, according to the Institute for Supply Management's report released October 1 from Tempe, Arizona.

The reading extends a run of growth. The overall economy continued in expansion for the 23rd consecutive month. ISM notes that a Manufacturing PMI above 47.5%, over a period of time, generally indicates expansion of the overall economy.

Demand signals were mixed but mostly positive. The New Orders Index expanded for the ninth consecutive month after four straight readings in contraction, registering 55.3%, up 1.6 percentage points from August's 53.7%. The Backlog of Orders Index registered 56.4%, up 4.6 percentage points from the 51.8% recorded in August.

The Production Index cooled. Its September reading of 56.7% came in 1.6 percentage points below the 58.3% recorded in August.

Price pressure intensified sharply. The Prices Index remained in increasing territory, registering 77.9%, a 6.8-percentage-point jump from August's reading of 71.1%.

Employment grew. The Employment Index reading of 52.7% rose 1.5 percentage points from August's figure of 51.2%.

Supplier deliveries slowed for the tenth month in a row. The Supplier Deliveries Index registered 59%, down 0.3 percentage point from 59.3% in August. The index is the only one in ISM's PMI Report that is inverted: a reading above 50% indicates slower deliveries, which ISM notes is typical as the economy improves and customer demand increases.

Inventories contracted. The Inventories Index registered 48.6%, down two percentage points from August's 50.6%. The Customers' Inventories Index reading of 41.6% fell 1.2 percentage points from the 42.8% recorded in August.

Trade indicators softened. The New Export Orders Index lost 2.3 percentage points in September for a reading of 50.9% versus 53.2% in August. The Imports Index registered 51%, a decrease of 1.5 percentage points from August's 52.5%.

Of the six largest manufacturing industries, five expanded in September: computer & electronic products; food, beverage & tobacco products; transportation equipment; machinery; and chemical products.

Twelve manufacturing industries reported growth in September. Listed in order, they are: electrical equipment, appliances & components; nonmetallic mineral products; primary metals; plastics & rubber products; computer & electronic products; fabricated metal products; furniture & related products; food, beverage & tobacco products; transportation equipment; machinery; miscellaneous manufacturing; and chemical products. Two industries reported contraction: printing & related support activities; and textile mills.

For construction-adjacent supply chains, the numbers cut both ways. Nonmetallic mineral products, primary metals and fabricated metal products all reported growth, while the 6.8-point surge in the Prices Index signals rising input costs that builders and contractors will likely face in coming procurement cycles.