U.S. Factory Sector Cooled Further in September as New Orders, Employment Contracted -- ISM
By Xavier Fontdegloria
Growth in the U.S. manufacturing sector moderated in September
to its lowest level in more than two years, continuing its downward
trend of recent months as slowing demand for goods weakens factory
The Institute for Supply Management said Monday that its index
of U.S. manufacturing activity decreased to 50.9 in September from
52.8 in August, the lowest level since May 2020, when the economy
was brought to a standstill amid the first wave of the Covid-19
Economists polled by The Wall Street Journal expected the index
to come in at 52.0.
The index, which is based on a poll among manufacturers across
the U.S., suggests factory activity barely expanded over the month
as the reading came in just above the 50.0 threshold that signals
The index reflects companies are adjusting to potential future
lower demand after four straight months of softening new orders
rates, said Timothy Fiore, chair of the ISM Manufacturing Business
Growth in the U.S. factory activity is moderating as a slowing
global economy, tighter monetary policy and the switch of spending
away from goods hits the sector.
The decline in the overall ISM index was driven by significant
drops in new orders and employment components.
The new orders index returned to contraction territory at 47.1,
falling from 51.3 the previous month, in a sign of weakening demand
"Concerns of global economic slowdown are growing, and [we are]
experiencing some customers pulling back orders," one respondent
from the chemical products sector said.
The employment index fell to 48.7 from 54.2 in August, signaling
that companies polled on average shed jobs. However, comments from
respondents didn't mention any large-scale layoffs, Mr. Fiore
"This indicates companies are confident of near-term demand, so
primary goals are managing medium-term head counts and supply-chain
inventories," he said.
The production index edged up slightly to 50.6 from 50.4,
suggesting marginal output growth.
Supply chains continued to normalize in September, according to
the survey. The supplier deliveries index fell to 52.5 from 55.1,
posting the lowest level since December 2019.
Price growth also continued to slow, a sign of abating inflation
pressures. The prices index fell slightly to 51.7 from 52.5, the
lowest reading since June 2020.
"Raw materials are becoming more available, and some raw
materials prices are falling," said one respondent from the
plastics and rubber products industry.
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(END) Dow Jones Newswires
October 03, 2022 10:38 ET (14:38 GMT)
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