Zforex
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The Institute for Supply Management (ISM) reported that U.S. manufacturing showed signs of recovery in September, with increased production and employment. This positive trend was the third consecutive month of improvement, boosting expectations for stronger economic growth in the third quarter. The Commerce Department's data also indicated solid construction spending in August, fueled by housing and factory construction.
The ISM's manufacturing Purchasing Managers' Index (PMI) rose to 49.0 in September, the highest since November 2022, up from 47.6 in August. However, it's noteworthy that this marked the 11th consecutive month with a PMI below 50, indicating a contraction in manufacturing. This extended stretch of contraction is the longest since the 2007-2009 Great Recession.
Economists had anticipated a more modest increase, with the index edging up to 47.7. The PMI surpassing 48.7, which is considered a threshold for economic expansion, added to optimism. Third-quarter growth estimates ranged as high as a 4.9% annualized rate, compared to the 2.1% growth rate in the April-June quarter.
The ISM survey revealed that five manufacturing sectors reported growth in September, including textile mills and primary metals, while 11 industries, including computer and electronic products and machinery, reported contraction.
Despite the mixed responses from survey participants, some noted stable conditions while others expressed concerns about factors like the Panama Canal drought and supply chain disruptions. Nevertheless, the overall resilience of the economy has led to hope that a recession may be avoided in the near future.
In addition to the PMI, other economic indicators, such as orders for durable goods and business spending on equipment, indicated strength in the manufacturing sector. New orders in the ISM survey improved, leading to increased factory production.
Factory employment also rebounded after a slump in July, with the employment gauge rising to 51.2 in September. However, challenges like attrition and hiring freezes persisted.
In terms of prices, the survey revealed that manufacturers paid lower prices for inputs, with the prices-paid measure dropping from 48.4 in August to 43.8 in September. While this suggests goods disinflation, it's worth noting that auto workers' strikes and rising energy prices could potentially impact prices in the future.
Construction spending continued to show strength, with a 0.5% increase in August, driven by spending on housing and factory construction. However, high mortgage rates posed a potential threat to this momentum.
The ISM's manufacturing Purchasing Managers' Index (PMI) rose to 49.0 in September, the highest since November 2022, up from 47.6 in August. However, it's noteworthy that this marked the 11th consecutive month with a PMI below 50, indicating a contraction in manufacturing. This extended stretch of contraction is the longest since the 2007-2009 Great Recession.
Economists had anticipated a more modest increase, with the index edging up to 47.7. The PMI surpassing 48.7, which is considered a threshold for economic expansion, added to optimism. Third-quarter growth estimates ranged as high as a 4.9% annualized rate, compared to the 2.1% growth rate in the April-June quarter.
The ISM survey revealed that five manufacturing sectors reported growth in September, including textile mills and primary metals, while 11 industries, including computer and electronic products and machinery, reported contraction.
Despite the mixed responses from survey participants, some noted stable conditions while others expressed concerns about factors like the Panama Canal drought and supply chain disruptions. Nevertheless, the overall resilience of the economy has led to hope that a recession may be avoided in the near future.
In addition to the PMI, other economic indicators, such as orders for durable goods and business spending on equipment, indicated strength in the manufacturing sector. New orders in the ISM survey improved, leading to increased factory production.
Factory employment also rebounded after a slump in July, with the employment gauge rising to 51.2 in September. However, challenges like attrition and hiring freezes persisted.
In terms of prices, the survey revealed that manufacturers paid lower prices for inputs, with the prices-paid measure dropping from 48.4 in August to 43.8 in September. While this suggests goods disinflation, it's worth noting that auto workers' strikes and rising energy prices could potentially impact prices in the future.
Construction spending continued to show strength, with a 0.5% increase in August, driven by spending on housing and factory construction. However, high mortgage rates posed a potential threat to this momentum.
