September Manufacturing Report is Mixed Bag

Without a doubt, glimmers of improvement are beginning to appear throughout the business landscape. But, most economic indicators I see continue to point towards a recovery that will be bumpy, at best.

To help illustrate my point, let me walk you through some new survey results from the latest Manufacturing ISM Report on Business. The data shows that:

Economic activity in the manufacturing sector expanded in September for the 14th consecutive month.

However, growth of new orders continued to slow.

"While the headline number shows relative strength this month as the PMI reading of 54.4 percent is still quite positive, the overall picture is less encouraging. The growth of new orders continued to slow, as the index is down significantly from its cyclical high of 65.9 percent (January 2010). Production is currently growing at a faster rate than new orders, but it typically lags and would be expected to weaken further in the fourth quarter," explains Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee. "Manufacturing has enjoyed a stronger recovery than other sectors of the economy, but it appears that weaker growth is the expectation for the fourth quarter. Both the Inventories and Backlog of Orders Indexes are sending strong negative signals of weakening performance in the sector."

Here's a look at some of the survey results in more detail:

So, even though many businesses are feeling somewhat better than they did at this time last year, it's clear that most remain very cautious. To mitigate some of the risks inherent to this type of uncertainty, keep in close contact with your strategic suppliers. By building strong, collaborative relationships throughout your supplier network, you'll be better prepared for changes to their inventories, financial conditions, etc.

A comprehensive breakdown of the latest Manufacturing ISM Report on Business is available here.

TAGS: Finance
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