The US Purchasing Managers Index (PMI) for September was released Tuesday by the Institute for Supply Management (ISM), and came in at a level of 47.2, same as in August, but again below the key 50 mark that separates US manufacturing expansion from contraction.

Supply Chain Digest Says...   Fiore added that “Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty. Production execution stabilized.”     What do you say?   Click here to send us your comments       Click here to see reader feedback

The US PMI had previously been in contraction territory for 17 straight months until it poked its head into expansion in March, but has fallen back to contraction now in each of the last six months.

The overall economy continued in expansion for the 52nd month after one month of contraction in April 2020. The PMI tracks closely but not exactly with the overall US economy.

A Manufacturing PMI above 42.5, over a period of time, generally indicates an expansion of the overall economy, according to ISM.

The other PMI numbers we track were also mostly negative.

That starts with the New Order Index, which remained in contraction territory with a score of 46.1, 1.5 percentage points higher than the 44.6 recorded in August, but still a negative sign for future US manufacturing activity.

The September score of the Production Index was 49.8, 5 percentage points lower than August’s figure of 44.7, as manufacturing output once was in contraction status – but not by much.

The Prices Index went into contraction territory for the first time this year, registering 48.3, down 5.7 percentage points compared to the reading of 54 in August. That means most companies saw a drop in the cost of components, materials and other inputs (below 50 = falling prices) in September.

The Backlog of Orders Index registered 44.1, up 0.5 percentage point compared to the 43.6 recorded in August. That means the order book of most companies is shrinking, with the index level still well below the 50 mark.

The Supplier Deliveries Index remained in “slower” territory, registering 52.2, which was1.7 percentage points higher than the 50.5 recorded in August

Supplier Deliveries is the only ISM index that is inversed, with a reading of above 50 indicating slower deliveries, which is typical as the economy improves and customer demand increases - or the reverse.

The Inventories Index came in at 43.9, down 6.4 percentage points compared to August’s reading of 50.3., with the score below 50 indicating inventory levels at companies are decreasing.

Said Timothy Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee: “Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy — which the US. Federal Reserve addressed by the time of this report — and election uncertainty. Production execution stabilized in September. Suppliers continue to have capacity, with lead times improving and shortages reappearing.”

As always, the ISM report provides a graphic of the PMI scores the last 12 months, which as can be seen indicates the measure has been below the key 50 for the past year and actually since November 2022, with the exception of March 2024. It is now averaging just 48.0 over the past year.

US PMI Last 12 Months

Source: ISM

As always, the ISM report provides a graphic of the PMI scores the last 12 months, which as can be seen indicates the measure has been below the key 50 level for the past year and actually since November 2022, with the exception of March 2024. It is now averaging just 48.0 over the past year.

Of the 18 sectors tracked by ISM, just five reported growth in September. They are, in order: Petroleum & Coal Products; Food, Beverage & Tobacco Products; Textile Mills; Furniture & Related Products; and Miscellaneous Manufacturing.

As always, there were some interesting comments from PMI survey respondents.

“Business is flat. Waiting for interest rates to drop and the election outcome in November before we confirm our 2025 plans. Currently planning on a flat 2025,” said one manager in the furniture sector.

“Our sales continue to be flat. Our customers are telling us that although our products perform very well, they are forced to seek lower-cost components to maintain their sales,” added a respondent in the textile industry.

Finally, a manager in the transportation equipment industry observed that “Global demand continues to remain soft. Fourth-quarter forecasts have been further reduced, with several new programs shifted from 2024 to 2025. Manpower, working capital and supplies are being flexed down in response. The previously anticipated shift from internal combustion engine to electric vehicle (EV) technology has been pushed out due to market response.”

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