ISM Report: Manufacturing PMI Increases 0.4 Points to 49.1% in September

The ISM (Institute of Supply Management) Manufacturing PMI registered 49.1% last month, making September the seventh consecutive month of contraction. This figure is 0.4 points higher than August’s figure of 48.7%.

“Of the five subindexes that directly factor into the Manufacturing PMI, two (production and supplier deliveries) are in expansion territory, the same number as in August,” says Susan Spence, chair of the ISM’s manufacturing business survey committee. Anything lower than 50% represents contraction.

"The consecutive increases in the ISM manufacturing index are a positive sign, but a sustainable push above the 50 threshold is still some way off," says Oxford Economics Senior Economist Matthew Martin.

The new orders index fell into contraction territory, decreasing 2.5 points for a September reading of 48.9%. The employment index registered 45.3% after gaining 1.5 points, indicating contraction at a slower rate when compared to the previous month.

The production index entered expansion territory after gaining 3.2 points for a September reading of 51.0%.

“In September, U.S. manufacturing activity contracted at a slightly slower rate, with production growth the biggest factor in the 0.4-percentage point gain of the Manufacturing PMI. However, the combined drops in the new orders and inventories indexes (4.2 percentage points) exceeded the increase in the Production Index (3.2), rendering the Manufacturing PMI improvement negligible,” Spence says.

Five manufacturing industries reported growth in September:

• Petroleum & coal products
• Primary metals
• Textile mills
• Fabricated metal products
• Miscellaneous manufacturing

“Of the six largest manufacturing industries, only one (petroleum & coal products) expanded in September, compared to two in August,” Spence says.

Respondents in the comments of the survey detail the hardships their businesses are facing due to tariffs, inflation and geopolitical issues.

“Ongoing macroeconomic conditions highlighted by interest-rate management and tariffs continue to impact customer purchasing decisions, resulting in subdued production rates and growing cost concerns on direct material and operations,” writes a respondent in the machinery sector.

Another respondent in the transportation equipment sector explains how these business conditions are impacting employees.

“We believe we are in a stagflation period where prices are up but orders are down due to tariff policy, and again, customers are not willing to pay the higher prices, so they are just not buying. Continuing to find ways to reduce overhead, which means letting go of experienced workers.”