September ISM Manufacturing Moves Back Into Expansion at 51.5 Percent, Up From August’s 49.4 Percent; BUT 11 of 18 Industries Are in Contraction
From the Institute for Supply Management (bolds and most paragraph breaks are mine):
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 September PMI® registered 51.5 percent, an increase of 2.1 percentage points from the August reading of 49.4 percent.
The New Orders Index registered 55.1 percent, an increase of 6 percentage points from the August reading of 49.1 percent. The Production Index registered 52.8 percent, 3.2 percentage points higher than the August reading of 49.6 percent.
The Employment Index registered 49.7 percent, 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 percent. The Prices Index registered 53 percent 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).
Of the 18 manufacturing industries, seven are reporting growth in September in the following order: Nonmetallic Mineral Products; Furniture & Related Products; Textile Mills; Food, Beverage & Tobacco Products; Computer & Electronic Products; Miscellaneous Manufacturing; and Paper Products.
The 11 industries reporting contraction in September, listed in order — are: Printing & Related Support Activities; Petroleum & Coal Products; Wood Products; Apparel, Leather & Allied Products; Transportation Equipment; Machinery; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Chemical Products; and Electrical Equipment, Appliances & Components.
The GDP drivers of New Orders and Production are showing expansion. Backlog of Orders, the other direct future GDP indicator went from significant contraction in August (45.5 percent) to nearly breakeven in September (49.5 percent).
While the move back into expansion beats the alternative, this probably means, given what I believe is ISM’s positive selection bias, that manufacturing is pretty close to either very tiny expansion or very tiny contraction.
Zero Hedge notes that the related survey from ISM’s competitor, the Markit US Manufacturing PMI “managed a slightly better than expected 51.5 final print for September.” That’s a three-month low, and Markit’s accompanying report (per ZH) indicates that “Manufacturing growth slowed to a crawl in September, suggesting the economy is stuck in a soft-patch.”