The Economy

September Manufacturing Index Surprises On Upside

Oct. 3, 2005

Economists were expecting that the closely-watched monthly manufacturing index compiled by the Institute for Supply Management (ISM) would decline in September to 52%. It did not. Despite the damping impacts of high energy prices and damage from Hurricane Katrina, the manufacturing sector of the U.S. economy grew faster in September than in August. ISM's manufacturing index was 59.4% last month, nearly six percentage points higher than August's 53.6%, ISM reported on October 3. An index figure above 50% indicates that the manufacturing generally is growing; a figure below 50% signals contraction.

"While energy prices and the impact from Hurricane Katrina are major concerns, the manufacturing sector has regained significant momentum," says Norbert J. Ore, chair of ISM's manufacturing business survey committee.

New orders, production, employment, order backlogs and exports all grew faster in September than they did in August.

Significantly, prices that manufacturers paid for materials also increased -- a dramatic 15.5 points in September -- and that is worrisome because it could increase inflationary pressures within the economy and make the Federal Open Market Committee less likely to halt the series of quarter-point interest rate increases that began in June of last year.

There's another reason for some caution: The full impact of the Gulf Coast hurricanes may not yet be showing up in ISM's data. "More time is needed . . . to judge whether the September survey fully reflects the impact of production stoppages that occurred in Texas, Louisiana and Mississippi as part of a national picture," says Daniel J. Meckstroth, chief economist at Manufacturers Alliance/MAPI, an Arlington, Va.-based business and public policy research group.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.