From the Institute for Supply Management (title is theirs, other bolds are mine):
New Orders, Employment and Inventories Growing
Supplier Deliveries Slower
Economic activity in the manufacturing sector expanded in September following three consecutive months of slight contraction, and the overall economy grew for the 40th consecutive month …
… “The PMI™ registered 51.5 percent, an increase of 1.9 percentage points from August’s reading of 49.6 percent, indicating a return to expansion after contracting for three consecutive months. The New Orders Index registered 52.3 percent, an increase of 5.2 percentage points from August, indicating growth in new orders after three consecutive months of contraction. The Production Index registered 49.5 percent, an increase of 2.3 percentage points and indicating contraction in production for the second time since May 2009. The Employment Index increased by 3.1 percentage points, registering 54.7 percent. The Prices Index increased 4 percentage points from its August reading to 58 percent. Comments from the panel reflect a mix of optimism over new orders beginning to pick up, and continued concern over soft global business conditions and an unsettled political environment.”
Of the 18 manufacturing industries, 11 are reporting growth in September …
It’s the contraction in production that will tie in most directly to third-quarter GDP. It is gratifying to see new orders come back, because they were looking really weak last month.
That said, even though new orders expanded and production contracted slightly, the backlog of orders declined. If you’re among those wondering how that makes sense, join the club, and remember that for all its historical and predictive value, the ISM’s indices are of sentiment and aren’t hard financial numbers.
UPDATE: In hard-number news, from the Census Bureau:
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during August 2012 was estimated at a seasonally adjusted annual rate of $837.1 billion, 0.6 percent (±2.1%)* below the revised July estimate of $842.0 billion. The August figure is 6.5 percent (±2.1%) above the August 2011 estimate of $786.3 billion.
The decline was, as usual, not expected:
Construction spending in U.S. unexpectedly decreased in August
Construction spending in the U.S. unexpectedly fell in August for a second month as declines in commercial and government projects overshadowed the strongest pace of home building in three years.
… The median estimate of 43 economists surveyed by Bloomberg called for a 0.5 percent rise.