September Manufacturing ISM Report On Business

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 expanded in September for the 16th consecutive month, and the overall economy grew for the 64th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing expanded in September as the PMI registered 56.6 percent, a decrease of 2.4 percentage points when compared to August's reading of 59 percent.

ISM's New Orders Index registered 60 percent in September, a decrease of 6.7 percentage points when compared to the 66.7 percent reported in August, indicating growth in new orders for the 16th consecutive month.

ISM's Production Index registered 64.6 percent in September, which is a slight increase of 0.1 percentage point when compared to the 64.5 percent reported in August, indicating growth in production for the seventh consecutive month. This is the highest reading since May 2010 when the Production Index also registered 64.6 percent.

ISM's Employment Index registered 54.6 percent in September, which is a decrease of 3.5 percentage points when compared to 58.1 percent reported in August. This is the 15th consecutive month of growth in employment.

The delivery performance of suppliers to manufacturing organizations slowed in September at a slower rate relative to August as the Supplier Deliveries Index registered 52.2 percent. This month's reading is 1.7 percentage points lower than the 53.9 percent reported in August.

The Inventories Index registered 51.5 percent in September, which is 0.5 percentage point lower than the 52 percent registered in August, which indicates raw materials inventories are growing for the second consecutive month. An Inventories Index greater than 42.8 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

ISM's Backlog of Orders Index registered 47 percent in September, which is 5.5 percentage points lower than the 52.5 percent reported in August, indicating contraction in order backlogs following one month of growth. Of the 85 percent of respondents who reported their backlog of orders, 18 percent reported greater backlogs, 24 percent reported smaller backlogs, and 58 percent reported no change from August.

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

Keywords: Automation, Manufacturing, Process Industries, Discrete Industries, Supply Management, PMI, ISM, ARC Advisory Group.