US manufacturing sector grows for the fourth consecutive month: ISM
US manufacturing activity in September expanded for a fourth consecutive month, according to the Institute of Supply Management. The widely read report showed the overall US economy expanded for the 52nd consecutive month.
The PMI reading of 56.2 for September was considerably higher than the median estimate of 55.0. Economists expected a slight drop in the pace of manufacturing activity over the previous month when the PMI indicator reached 55.7. The September reading is the highest overall reading of 2013.
11 of the 18 manufacturing industries reported growth, with electrical equipment, appliances and components registering the biggest gain. Among the six industries to report contraction in September, apparel, leather and allied products registered the steepest decline. According to ISM chair Bradley Holcomb, the relationship between PMI and the overall economy corresponds to a 3.3 percent increase in real GDP from January to September on an annualized basis.
New orders advanced for a fourth consecutive month, albeit at a slower pace than August. In total, 12 of the 18 manufacturing industries reported growth in new orders. The pace of production growth also expanded in September, led by food, beverage and tobacco products.
The ISM Employment Index moved up slightly, as job growth expanded for the third consecutive month. However, only eight of the 18 manufacturing industries reported job growth, led once again by electrical equipment, appliances and manufacturing. There was a “steady increase in work this month,” according to a manager in the primary metals industry.
Overall, global sales are trending moderately higher, and the outlook remains strong, managers in the textile mills and electrical equipment fields said. The steady rise in PMI suggests the outlook will improve in the fourth quarter, “and we should see demand increase in October/November,” according to a representative from the food industry.
A separate report from Markit Group painted a slightly different picture than the ISM reading, indicating a slower rate of manufacturing growth in September due to modestly improving business conditions.
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