A report from
the Institute for Supply Management (ISM) showed on Tuesday the U.S.
manufacturing sector’s activity contracted again in September at a similar pace as in August.
The ISM's index
of manufacturing activity - the manufacturing PMI - checked in at 47.2 per cent
in September, unchanged
from an unrevised August reading. The latest reading indicated shrinkage in
the U.S. factory sector for the sixth straight month.
Economists had anticipated
the indicator to improve to 47.5 per cent.
According to
the report, the New Orders Index climbed 1.5 percentage points to 46.1 per cent
last month but remained in contraction territory for the sixth
consecutive month. In addition, the Production Index jumped 5.0 percentage points to 49.8 per cent,
staying in contraction territory for
the fourth straight month. The Supplier
Deliveries Index increased 1.7 percentage points to
52.2 per cent, marking the third consecutive
month of slower deliveries.
Meanwhile, the
Employment Index dropped 2.1 percentage points to 43.9 per cent, indicating that employment shrank
in September for the fourth month in a row. The Inventories Index tumbled 6.4 percentage points to
43.9 per cent, suggesting manufacturing
inventories returned into contraction territory after a one-month expansion in August.
On the price front, the Prices Index declined 5.7 percentage
points to 48.3 per cent, indicating that raw materials prices fell in September
after eight straight months of gains.
Commenting on
the September data, Timothy R. Fiore, Chair of the ISM Manufacturing Business
Survey Committee, noted that demand continued to be weak, output declined, and
inputs stayed accommodative. “Demand remains subdued, as companies showed an
unwillingness to invest in capital and inventory due to federal monetary policy
- which the U.S. Federal Reserve addressed by the time of this report - and
election uncertainty,” he explained.