PMI at 51.5%; September Manufacturing ISM Report On Business

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Economic activity in the manufacturing sector expanded in September following one month of contraction in August, and the overall economy grew for the 88th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee. "The September PMI registered 51.5%, an increase of 2.1 percentage points from the August reading of 49.4%. The New Orders Index registered 55.1%, an increase of 6 percentage points from the August reading of 49.1%. The Production Index registered 52.8%, 3.2 percentage points higher than the August reading of 49.6%. The Employment Index registered 49.7%, an increase of 1.4 percentage points from the August reading of 48.3 percent. Inventories of raw materials registered 49.5 percent, an increase of 0.5 percentage point from the August reading of 49%. The Prices Index registered 53% in September, the same reading as in August, indicating higher raw materials prices for the seventh consecutive month. Manufacturing expanded in September following one month of contraction in August, with nine of the 18 industries reporting an increase in new orders in September (up from six in August), and 10 of the 18 industries reporting an increase in production in September (up from eight in August)."

SEPTEMBER 2016 MANUFACTURING INDEX SUMMARIES

PMI

Manufacturing expanded in September as the PMI® registered 51.5%, an increase of 2.1 percentage points from the August reading of 49.4%, indicating growth in manufacturing following one month of contraction. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

A PMI® above 43.2%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the September PMI® indicates growth for the 88th consecutive month in the overall economy, and indicates growth in the manufacturing sector following one month of contraction. Holcomb stated, "The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through September (50.9%) corresponds to a 2.4% increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for September (51.5%) is annualized, it corresponds to a 2.6% increase in real GDP annually."

New Orders

ISM's New Orders Index registered 55.1% in September, which is an increase of 6 percentage points when compared to the 49.1% reported for August, indicating growth in new orders following one month of contraction. A New Orders Index above 52.2%, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The nine industries reporting growth in new orders in September — listed in order — are: Wood Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Computer & Electronic Products; Furniture & Related Products; Fabricated Metal Products; Paper Products; and Machinery. The six industries reporting a decrease in new orders during September — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Transportation Equipment; Electrical Equipment, Appliances & Components; Chemical Products; and Textile Mills.

Production

ISM's Production Index registered 52.8% in September, which is an increase of 3.2 percentage points when compared to the 49.6% reported for August, indicating growth in production in September following one month of contraction. An index above 51.3%, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 10 industries reporting growth in production during the month of September — listed in order — are: Miscellaneous Manufacturing; Nonmetallic Mineral Products; Computer & Electronic Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Primary Metals; Petroleum & Coal Products; Plastics & Rubber Products; Chemical Products; and Paper Products. The eight industries reporting a decrease in production during September — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Machinery; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Textile Mills.

Employment

ISM's Employment Index registered 49.7% in September, an increase of 1.4 percentage points when compared to the August reading of 48.3%, indicating contraction in employment in September for the third consecutive month. An Employment Index above 50.6%, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, the seven industries reporting employment growth in September — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Food, Beverage & Tobacco Products; Paper Products; and Computer & Electronic Products. The eight industries reporting a decrease in employment in September — listed in order — are: Petroleum & Coal Products; Transportation Equipment; Primary Metals; Fabricated Metal Products; Plastics & Rubber Products; Chemical Products; Machinery; and Printing & Related Support Activities.

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in September as the Supplier Deliveries Index registered 50.3%, which is 0.6 percentage point lower than the 50.9%reported for August. A reading below 50% indicates faster deliveries, while a reading above 50% indicates slower deliveries.

The seven industries reporting slower supplier deliveries in September — listed in order — are: Nonmetallic Mineral Products; Furniture & Related Products; Paper Products; Machinery; Food, Beverage & Tobacco Products; Chemical Products; and Primary Metals. The four industries reporting faster supplier deliveries in September are: Petroleum & Coal Products; Fabricated Metal Products; Plastics & Rubber Products; and Computer & Electronic Products. Seven industries reported no change in supplier deliveries in September compared to August.