The ISM (Institute for Supply Management) Manufacturing PMI registered 54.5% in September, a slight decrease of 0.1 percentage point from August, signaling expansion in the sector for the ninth straight month, but at a slower rate.

“Of the five subindexes that make up the PMI, only new orders and employment grew faster than the previous month,” says Susan Spence, chair of the ISM’s manufacturing business survey committee. A reading below 50% generally indicates contraction.

With a reading of 56.7%, the production index remained in expansion territory, despite falling 1.6 points from the August figure. The new orders and employment indexes grew at a faster rate, climbing to 55.3% and 52.7%, respectively.

The prices index jumped 6.8 points to 77.9% in September, driven by steel and aluminum prices, tariffs and petroleum-based product prices, according to Spence.

“In September, three of four demand indicators (the new orders, backlog of orders and new export orders indexes) remained in expansion, and the customers’ inventories index remained in ‘too low’ territory, contracting at a faster rate. A ‘too low’ status for the customers’ inventories index is usually considered positive for future production,” Spence says.

12 manufacturing industries reported growth in September:

• Electrical equipment, appliances & components
• Nonmetallic mineral products
• Primary metals
• Plastics & rubber products
• Computer & electronic products
• Fabricated metal products
• Furniture & related products
• Food, beverage & tobacco products
• Transportation equipment
• Machinery
• Miscellaneous manufacturing
• Chemical products

“Of the six largest manufacturing industries, five (computer & electronic products; food, beverage & tobacco products; transportation equipment; machinery; and chemical products) expanded in September,” Spence says.

40% of survey comments were positive, while 60% were negative, according to Spence. Some respondents expressed cautious optimism regarding strong order levels and business stability, while others point to sustained uncertainty surrounding tariffs and the impact of the Iran war.

“Better performance was driven primarily by temporary market effects, including (1) geopolitical uncertainties, (2) customers bringing forward purchases, (3) delayed raw material price increases and (4) reduced competitor capacity. However, these factors do not signal sustained recovery,” writes one respondent in the chemical products sector.

Another respondent in the machinery sector writes, “Canada tariffs have impacted cross-border costs and left our supply chain team scrambling — those supply chains took years to develop and nurture — hurting the very lead times government buyers are concerned about.”