Market news

1 October 2021

U.S. manufacturing activity expands further in September - ISM

A report from the Institute for Supply Management (ISM) showed on Friday the U.S. manufacturing sector’s activity expanded in September at a slightly faster pace than in August .

The ISM's index of manufacturing activity came in at 61.1 percent last month, up 1.2 percentage points from an unrevised August reading of 59.9 percent. The September reading pointed to the growth in the manufacturing sector for the 16th straight month.

Economists' had forecast the indicator to edge down to 59.6 percent.

According to the report, the Supplier Deliveries Index surged 3.9 percentage points to 73.4 percent, the Inventories Index increased 1.4 percentage points to 55.6 percent and the Employment Index rose 1.2 percentage points to 50.2 percent, returning into expansion territory. Meanwhile, the Backlog of Orders Index declined 3.4 percentage points to 64.8 percent in September and the Production Index decreased 0.6 percentage points to 59.4 percent. Elsewhere, the New Orders Index remained unchanged m-o-m at 66.7 percent in September. On the price front, the Prices Index went up 1.8 percentage points to 81.2 percent.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted that the manufacturing economy continued its growth in September but Survey Committee members reported that their companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand. “All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting products,” he said. “Global pandemic-related issues - worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions and overseas supply chain problems - continue to limit manufacturing growth potential. However, optimistic panel sentiment remains strong, with three positive growth comments for every cautious comment.”

Fiore also said that the past relationship between the PMI and the overall economy indicated that the PMI for September (61.1 percent) corresponds to a 5.1-percent increase in real gross domestic product (GDP) on an annualized basis.

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