The Institute for Supply Management (ISM) Manufacturing Purchasing Manager’s Index (PMI), released on the first business day of each month for the previous month, surveys purchasing and supply executives around the country on new orders, production, employment, and much more. Manufacturing supply executives are polled on their view of the current economic climate in relation to their respective businesses. The ISM Manufacturing PMI is a diffusion index – “they have properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change.” A reading above 50 percent indicates that the manufacturing economy is generally expanding while a reading below 50 percent indicates that it is generally declining. The ISM Manufacturing PMI is considered a highly reliable gauge of current business conditions for the manufacturing sector.
This morning’s ISM Manufacturing PMI for September came in at 49.0%, up 1.4 percentage points above its August reading and better than consensus. This is its eleventh consecutive reading in contraction territory (< 50.0), though it has moved higher for the past three months. While most manufacturing industries continued to report slower growth, the Institute for Supply Management noted that the sector’s contraction was less negative than in recent months.
Of the six biggest manufacturing industries, just two registered growth in September: Food, Beverage & Tobacco Products; and Petroleum & Coal Products.
Here is an excerpt from the latest survey:
“The U.S. manufacturing sector continued its contraction trend but at a slower rate, recording its best performance since November 2022, when the PMI® also registered 49 percent. Companies are still managing outputs appropriately as order softness continues, but the month-over-month PMI® improvement in September is a clear positive.“
Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee