After contracting in August, the manufacturing sector of the economy expanded in September, contributing to the 88th consecutive month of growth for the overall economy.
In the latest Manufacturing Institute for Supply Management (ISM) report on business, the nation’s supply executives in the latest Manufacturing ISM Report On Business say the September purchasing managers index (PMI) rose 2.1% from the previous reading of 51.5%.
A reading above 50% indicates growth, while anything below that mark suggests contraction.
The New Orders Index shot up 6.9% last month to 55.1%, while the Production Index came in at 52.8%, an advance of 3.2%.
The Employment Index inched 1.4% higher to register 49.7%, as inventories of raw materials registered 49.5% for a gain of 0.5%.
The Prices Index was unchanged at 53%, indicating higher raw materials prices for the seventh month in a row.
Stifel Fixed Income Chief Economist Lindsey Piegza calls the report "a welcome step in the right direction," but points out that continued minimal growth both domestically and internationally will most likely limit domestic production from contributing much -- if anything -- to second-half growth.
"Nevertheless," she adds, "a better-than-expected report -- even one month -- helps alleviate fears of economic contraction and furthermore, bolsters the argument for the Fed to raise sooner than later."
Of the 18 manufacturing industries, seven reported growth in September:
- Nonmetallic Mineral Products;
- Furniture & Related Products;
- Textile Mills;
- Food, Beverage & Tobacco Products;
- Computer & Electronic Products;
- Miscellaneous Manufacturing; and
- Paper Products.
The 11 industries reporting contraction were:
- Printing & Related Support Activities;
- Petroleum & Coal Products;
- Wood Products;
- Apparel, Leather & Allied Products;
- Transportation Equipment;
- Plastics & Rubber Products;
- Primary Metals;
- Fabricated Metal Products;
- Chemical Products; and
- Electrical Equipment, Appliances & Components.