Benchmark PMI at 47.2, Flat from August; ISM Notes 22 of Last 23 Months Without Growth in Supply Chain/Logistics Sector
# Manufacturing Output Contracts Again in September, ISM Reports
Author: LM Staff
October 1, 2024
According to the latest “Manufacturing Business Report” released by the [Institute for Supply Management (ISM)](https://www.logisticsmgmt.com/ISM) today, manufacturing output has been contracting for the sixth consecutive month in September.
The benchmark value of the report—the Purchasing Managers’ Index (PMI)—stands at 47.2 (50 or above indicates growth), unchanged from August. ISM added that PMI has not seen growth in 22 out of the past 23 months, while the overall economy has been growing for the 53rd consecutive month at a similar pace.
The September PMI is 0.8% below its 12-month average of 48.9, with March’s 50.3 being the highest value during this period and November 2023’s 46.6 being the lowest.
ISM reported that five manufacturing sectors experienced growth in August, including: Petroleum and Coal Products; Food, Beverage & Tobacco Products; Textile Mills; Furniture & Related Products; and Other Manufacturing. Thirteen industries saw contraction, including: Printing and Related Support Activities; Plastics & Rubber Products; Wood Products; Apparel, Leather & Allied Products; Primary Metals; Transportation Equipment; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Paper Products; Machinery; Chemical Products; Fabricated Metal Products; Computers & Electronic Products.
Most key indicators in the report declined in August:
– New Orders, seen as a driver of manufacturing activity, grew by 1.5% to 46.1, contracting for the sixth consecutive month but at a slower pace. Two industries saw growth, and this category has not shown continuous growth since its 24-month expansion period ending May 2022;
– The Production Index stood at 49.8, up by 5.0%, marking four months of contraction but with a slowing rate of decline. Five industries experienced growth;
– The Employment Index fell to 43.9, down by 2.1%, contracting for the fourth consecutive month and accelerating in pace after seven straight months of contraction. This is the lowest reading since July 2020 at 43.7; it was 45.9 in February 2023 and 45 in July 2023;
– Supplier Delivery Time was at 52.2 (above 50 indicates slower delivery), up by 1.7% from August, indicating a slowdown in delivery speed with eight industries reporting slower deliveries;
– Backlog Orders were at 44.1, up by 0.5% compared to August, marking the lowest monthly reading since November 2023 and contracting for the 24th consecutive month but at a slowing rate of decline after a previous 27-month growth period with two industries seeing growth;
– The Prices Index fell to 48.3, down by 5.7%, declining after eight months of growth, with seven industries reporting higher prices paid;
– Inventories were at 43.9, down by 6.4% from August’s increase and contracting for the 18th consecutive month prior to this decline, with one industry reporting increased inventory levels;
– Customer Inventories Index was at 50.0, up by 1.6%, shifting from “too low” in August to “adequate,” with four industries reporting higher customer inventories.
“In September, U.S. manufacturing activity contracted again at the same pace as last month,” wrote Timothy Fiore, Chair of ISM’s Manufacturing Business Survey Committee, in the report. “Demand remains weak, output is down, and inputs are plentiful. Committee members noted that their companies continue to work on aligning workforce levels with forecasted demand. Inputs—defined as supplier deliveries, inventories, prices, and imports—are generally meeting future growth needs, with inventory levels returning to lower levels and suppliers showing some difficulty in meeting customer demands.”
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Source: Logistics Management
