September Manufacturing ISM Report; PMI at 50.2%

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Economic activity in the manufacturing sector expanded in September for the 33rd consecutive month, and the overall economy grew for the 76th 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 50.2 percent, a decrease of 0.9 percentage point from the August reading of 51.1 percent. The New Orders Index registered 50.1 percent, a decrease of 1.6 percentage points from the reading of 51.7 percent in August. The Production Index registered 51.8 percent, 1.8 percentage points below the August reading of 53.6 percent. The Employment Index registered 50.5 percent, 0.7 percentage point below the August reading of 51.2 percent. Backlog of Orders registered 41.5 percent, a decrease of 5 percentage points from the August reading of 46.5 percent. The Prices Index registered 38 percent, a decrease of 1 percentage point from the August reading of 39 percent, indicating lower raw materials prices for the 11th consecutive month. The New Export Orders Index registered 46.5 percent, the same reading as in August. Comments from the panel are mixed with some concern about the global economy and customer confidence."

SEPTEMBER 2015 MANUFACTURING INDEX SUMMARIES

PMI

Manufacturing expanded in September as the PMI registered 50.2 percent, a decrease of 0.9 percentage point from the August reading of 51.1 percent, indicating growth in manufacturing for the 33rd consecutive month. The September PMI is the lowest reading since May 2013 when the PMI registered 50.1 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the September PMI indicates growth for the 76th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 33rd consecutive month. Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through September (52.2 percent) corresponds to a 2.9 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for September (50.2 percent) is annualized, it corresponds to a 2.2 percent increase in real GDP annually."

New Orders

ISM's New Orders Index registered 50.1 percent in September, a decrease of 1.6 percentage points when compared to the August reading of 51.7 percent, indicating growth in new orders for the 34th consecutive month, but at a slower rate. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

Production

ISM's Production Index registered 51.8 percent in September, which is a decrease of 1.8 percentage points when compared to the 53.6 percent reported in August, indicating growth in production for the 37th consecutive month. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

Employment

ISM's Employment Index registered 50.5 percent in September, which is a decrease of 0.7 percentage point when compared to the 51.2 percent reported in August, indicating growth in employment for the fifth consecutive month. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

About This Report

The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.