The US Purchasing Managers Index (PMI) for September, released Monday by the Institute for Supply Management (ISM), came in at 50.9, down 1.9 percentage points from the August number, but still barely above the key 50 level that separates US manufacturing expansion from contraction.
Supply Chain Digest Says...
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| Added a manager in the food/beverage sector: “Almost all suppliers are experiencing lead times growth. It seems no one wants to keep inventory on hand anymore.” |
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The trajectory is not good, with declines in the PMI in June and July, followed by a flat score in August but now another fall in September
Stll the August figure indicates expansion in the US overall economy for the 28th month in a row after the last contractions in April and May 2020. (See chart of the PMI scores for the last 12 months below - the average score over that period was a strong 56.2.)
And now the dicey score for September, the lowest since May 2020, when it registered 43.5.
Other measures in the ISM report were mostly down.
The important New Orders Index returned to contraction territory at 47.1, 4.2 percentage points lower than the 51.3 recorded in August, indicating a slowdown in order bookings.
The Backlog of Orders Index registered 50.9, 2.1 percentage points lower than the August reading of 53.
However, the Inventories Index registered 55.5, 2.4 percentage points higher than the August reading of 53.1, indicating companies are modestly increasing inventory levels.
The Prices Index, which tracks the cost of materials and components from suppliers, continues to fall. It registered 51.7, down 0.8 percentage point compared to the August figure of 52.5. This is the index’s lowest reading since June 2020, and the sixth straight month of a decline in the index, as it would appear that inflation is droppimg sharply, with roughly 50% of companies seeing lower prices for manufacturing inputs.
US PMI Last 12 Months
Source: ISM
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However, 9 of the 18 manufacturing sectors ISM tracks reported growth in September.
As always, there were some interesting comments from PMI survey respondents. For example, one chemicals industry manager had this to say: "Concerns of global economic slowdown are growing, and (we are) experiencing some customers pulling back orders."
But added a manager in the food/beverage sector: “Almost all suppliers are experiencing lead times growth. It seems no one wants to keep inventory on hand anymore.”
Finally, a manager in the electrical equipment industry had this to say:"Business continues to be strong. Some commodities within the supply chain are starting to stabilize, while others are still causing disruption for production. Electrical and wiring components continue to cause significant issues. (We) cannot run as consistently as we would like.”
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