Large Decline in U.S. Manufacturing for September

Oct. 1, 2008
ISM reports lowest level for index since Oct. 2001

Manufacturing contracted in September as the Institute for Supply Management's (ISM) PMI registered 43.5%, 6.4 percentage points lower than the 49.9% reported in August. This is the lowest reading since October 2001 when the PMI registered 40.8%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

"The PMI indicates a significantly faster rate of decline in manufacturing during September, marking a departure from the 2008 trend toward negligible growth or contraction each month. This month's report is showing prices rising at a much slower rate, as the Prices Index fell to the lowest level in 21 months. Export orders continued to increase, but at a slower rate than in August," said Norbert J. Ore, C.P.M., chair of the ISM Manufacturing Business Survey Committee.

Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI commented that the drop is both sudden and substantial. "The manufacturing industry has been in recession since October of 2007 and has seen moderate declines in production until recently. A broad-based and deep fall in the September report indicates that the energy shock, housing collapse, and financial crisis has reached a point where the recession has spread to the general economy.

"Spring 2008 tax rebates provided only temporary relief, as they were designed, but did nothing to correct the underlying problem of over-indebted households, falling housing and stock market prices, and an overleveraged financial system. Unfortunately, we do not expect any recovery in manufacturing activity until mid 2009."

ISM's Employment Index registered 41.8% in September, which is a decrease of 7.9 percentage points when compared to the 49.7% reported in August.

The ISM Prices Index registered 53.5% in September compared to 77% in August, indicating manufacturers are paying higher prices on average when compared to August, but that prices are increasing at a much slower rate. While 30% of respondents reported paying higher prices and 23% reported paying lower prices, 47% of supply executives reported paying the same prices as the preceding month.

Popular Sponsored Recommendations

Powering Up Productivity: The Transformative Power of AP Automation in Manufacturing

Oct. 25, 2023
Discover how AP Automation is revolutionizing the manufacturing industry, driving efficiency, cost savings, and security. In today's world, automation is the key to staying competitive...

Shifting Your Business from Products to Service-Based Business Models: Generating Predictable Revenues

Oct. 27, 2023
Executive summary on a recent IndustryWeek-hosted webinar sponsored by SAP

Lean Manufacturing in the Age of the Industrial Internet

Oct. 24, 2023
Read how advanced MES capabilities can help you improve your labor utilization, reduce WIP, and optimize your production. Download the white paper today.

The Benefits of Continuous Thermal Monitoring

Oct. 17, 2023
Read this eBook to learn more about collecting and using data intelligently to improve performance.

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!