Manufacturing Sectors Continue Growth

The Institute for Supply Management, the largest nonprofit supply management organization, releases a monthly Report on Business that measures economic activity in the manufacturing sector. One of the key measures in the Report on Business is the Purchasing Managers Index, an index that signals expansion (over 50) or contraction (below 50) in the manufacturing sector.

While industry experts were calling for a Purchasing Managers Index level of just over 60, the September index came in slightly lower, at 59.8. Additionally, ISM’s measure of overall economic activity grew for the 113th consecutive month.

The New Orders Index dropped 3.3 percent, but at 61.8, still suggests a growing sector, albeit at a slightly lower rate than last month’s 63.3 percent. Production levels and employment, however, came in higher than the previous month. Both are showing at least two years of consecutive growth. At only 40.5 percent, customer inventories are somewhat lower than comfortable, but that also suggests a need for further new orders.

Several comments by those providing input to the index focused on the impact and potential effects of tariffs. The comments addressed products ranging from computers and electronics to chemicals, furniture and plastics. Labor was the second most-frequently cited problem area.

Overall, the manufacturing sector is showing widespread growth, with 15 of 18 sectors reporting expansion. Only the Primary Metals sector showed contraction in September.