Economy
ISM: Manufacturing contracts again in September
Written by Brett Linton
October 1, 2024
US manufacturing activity contracted for the sixth consecutive month in September, according to the latest report from the Institute for Supply Management (ISM). The index has indicated a contracting industrial sector for 22 of the past 23 months.
The ISM Manufacturing PMI, at 47.2% in September, was unchanged from August. A reading above 50% indicates growth in the manufacturing economy, while a reading below 50 indicates contraction. The index has been bleak since December 2022 on a three-month moving average basis.
Despite this, ISM said the overall economy continued to expand in September for the 53rd month. (The institute notes that a Manufacturing PMI above 42.5% over some time generally indicates that the overall economy is expanding.)
“Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy … and election uncertainty,” said ISM Chair Timothy R. Fiore. He remarked that suppliers still have available capacity and lead times are improving, though product shortages have reappeared.
ISM reported growth in September in five of the 16 manufacturing industries it tracks. Primary metals and fabricated metal products were two identified as in contraction.
Steel market comments
ISM’s report shared multiple comments from survey respondents.
One executive in the primary metals industry expressed their company’s difficulties: “Still hiring to fill vacant positions in production/management. Not adding new jobs. Automotive original equipment manufacturers (OEMs) are starting to slow or cancel orders. The pace is slowing.”
Another respondent within the fabricated metal products sector shared his uncertainty about the future, commenting, “We won’t realize the effect of interest rate adjustments with new project starts until the first quarter of 2025.”
The full September Manufacturing PMI report is available here on the ISM website.
Brett Linton
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