Manufacturing Activity Contracts for a Sixth Straight Month
[Stay on top of transportation news: Get TTNews in your inbox.]
U.S. manufacturing activity shrank in September for a sixth month, reflecting weak orders and declining employment.
The Institute for Supply Management’s factory gauge held at 47.2, data out Oct. 1 showed, extending a period of persistent softness. A reading below 50 indicates contraction.
The rates of decline for the group’s measures of orders and output eased up from the prior month but remained in contraction territory. Bookings shrank for a sixth month, keeping production constrained and pushing down the ISM’s employment index.
“Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy — which the U.S. Federal Reserve addressed by the time of this report — and election uncertainty,” Timothy Fiore, chair of the ISM’s Manufacturing Business Survey Committee, said in a statement. The Fed lowered rates a half percentage point on Sept. 18.
Thirteen industries reported contraction in September, led by printing, plastics and rubber, and wood products. Five sectors expanded.
Production almost returned to expansion, but inventories reverted to low levels and #employment shrunk at a faster rate. It all added up to U.S. #manufacturing contracting again in September; the PMI® of 47.2% matched the previous month. https://t.co/CKNcVMEf3g #ISMPMI #economy — Institute for Supply Management (@ism) October 1, 2024
Subdued demand, including from overseas customers, helped reduce price pressures on materials and inputs. The prices-paid index fell 5.7 points — the most since May 2023 — to 48.3, the first time this year that the gauge has indicated decreasing overall costs.
Cheaper input materials, such as oil, can help lead to further declines in prices for finished goods as well as restrain services inflation. That would keep Fed policymakers on track to continue lowering interest rates to guard against any deterioration in the labor market.
The survey was conducted prior to a strike at East and Gulf Coast ports that risks pushing up shipping costs and import prices. The work stoppage affects 36 ports that have a combined capacity to handle as much as half of all U.S. trade volumes, and the closures immediately halt container operations and auto shipments.
TT's Seth Clevenger and Erika Voss of DAT Freight and Analytics discuss crucial strategies and best practices for safeguarding information and assets in a high-demand period. Tune in above or by going to RoadSigns.ttnews.com.
The ISM manufacturing employment index dropped to 43.9 in September, marking a fourth month of contraction. The Bureau of Labor Statistics issues its latest employment report on Oct. 4, and economists expect another decline in factory payrolls.
Limited capital spending, owed in part to high borrowing costs and uncertainty surrounding the November presidential election, remains a headwind for manufacturing. Moreover, export markets are fragile. The ISM index of export orders declined last month and showed the steepest pace of contraction since January.
The ISM report also showed inventories shrank at the fastest pace this year, suggesting producers are keeping stockpiles lean.
Want more news? Listen to today's daily briefing below or go here for more info:
