September 2019 Manufacturing ISM Report On Business: Manufacturing Continues Contraction

By Steve Clouther

Category:
Industry Trends

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector contracted in September, and the overall economy grew for the 125th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing contracted in September, as the PMI registered 47.8 percent, a decrease of 1.3 percentage points from the August reading of 49.1 percent.  This is the lowest reading since June 2009, the last month of the Great Recession, when the index registered 46.3 percent.  The PMI contracted for the second straight month and continues six straight months of softening in manufacturing.

Manufacturing Contraction

ISM’s New Orders Index registered 47.3 percent in September, an increase of 0.1 percentage point when compared to the 47.2 percent reported for August.  This indicates that new orders contracted for the second month in a row.

ISM’s Production Index registered 47.3 percent in September, which is a decrease of 2.2 percentage points when compared to the 49.5 percent reported for August, indicating the second consecutive month of contraction.

ISM’s Employment Index registered 46.3 percent in September, a decrease of 1.1 percentage points when compared to the August reading of 47.4 percent.  This indicates contraction in September for the second consecutive month.

The delivery performance of suppliers to manufacturing organizations slowed in September, as the Supplier Deliveries Index registered 51.1 percent.  This is 0.3 percentage point lower than the 51.4 percent reported for August, and this is the 43rd straight month of slowing supplier deliveries, but at marginal rates.

The Inventories Index registered 46.9 percent in September, a decrease of 3 percentage points from the 49.9 percent reported for August.  This is the lowest reading since December 2016, when the index registered 46 percent.  The index contracted for the fourth straight month.

ISM’s Backlog of Orders Index registered 45.1 percent in September, which is 1.2 percentage points lower than the 46.3 percent reported in August, indicating order backlogs contracted for a fifth consecutive month, at a faster rate in September.

ISM’s New Export Orders Index registered 41 percent in September, 2.3 percentage points lower compared to the August reading of 43.3 percent, indicating that new export orders contracted for the third month in a row.

ISM’s Imports Index registered 48.1 percent in September, an increase of 2.1 percentage points when compared to the 46 percent reported for August, indicating that imports contracted in September for the third consecutive month.

Of the 18 manufacturing industries, three reported growth in September: Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Chemical Products.  The 15 industries reporting contraction in September — in the following order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Wood Products; Electrical Equipment, Appliances & Components; Textile Mills; Paper Products; Fabricated Metal Products; Plastics & Rubber Products; Petroleum & Coal Products; Primary Metals; Transportation Equipment; Nonmetallic Mineral Products; Machinery; Furniture & Related Products; and Computer & Electronic Products.

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