The U.S. manufacturing sector faced its 11th consecutive month of contraction, but signs of resilience are emerging, according to the latest Manufacturing ISM Report On Business. The Manufacturing PMI registered 49% in September, up 1.4% points from August, marking its highest level since November 2022. While this extends the contraction streak, it also marks the third month of positive change.
Of the key subindexes contributing to the Manufacturing PMI, two—Production and Employment—have entered expansion territory, breaking a three-month streak of no growth. However, the New Orders Index continued to contract for the 13th consecutive month, though at a slower rate. Notably, two major manufacturing industries—Food, Beverage & Tobacco Products and Petroleum & Coal Products—registered growth in September.
A Manufacturing PMI above 48.7% suggests overall economic expansion. Although the September PMI signals weak overall economic growth following nine months of contraction, it corresponds to a 0.1% increase in real GDP on an annualized basis.
The data indicates that the U.S. manufacturing sector, while still facing challenges, exhibits cautious optimism and is gradually improving in several areas. According to Timothy R. Fiore, Chair of the Manufacturing Business Survey Committee, new order levels and output improvements are noteworthy. Fiore noted that the UAW strike and its impact on output remain uncertain. Additionally, concerns about prolonged high interest rates and rising energy prices may exert pressure on certain sectors.
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