NEW YORK - The overall economy grew for the fifth straight time after seven months of contraction, while the manufacturing sector expanded for the second time after eighteenth months of contraction, the Institute for Supply Management reported this morning.
According to the ISM’s monthly report on business, the ISM index dipped to 52.6 in September from 52.9 in August.
Economists polled by Thomson Reuters predicted the index would rise to 54.0.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
“The manufacturing sector grew for the second consecutive month in September," said Norbert J. Ore, chair of the Institute of Supply Management's manufacturing business survey committee. “While the rate of growth moderated slightly when compared to August, the recovery broadened as the number of industries reporting growth increased from 11 to 13. Both new orders and production are growing, but at a slower rate when compared to August. It appears the fundamentals for continuing recovery are still at work as inventories and sales are gaining balance. This month, we asked a special question with regard to the American Recovery and Reinvestment Act. Twelve of the 18 manufacturing industries expect to derive some benefit from the program, and 12 manufacturing industries responded that they expect their companies to see some benefit.”
The closely watched prices paid index fell to 63.5 from 65.0. The employment index was at 46.2, off from 46.4 the prior month.
The production index decreased to 55.7 from 61.9, the new orders index slid to 60.8 from 64.9; the supplier deliveries index climbed to 58.0 from 57.1; the export orders index decreased to 55.0 from 55.5; and the imports index grew to 52.0 from 49.5.
The inventories index increased to 42.5 from 34.4; the customers’ inventories index held at 39.0; and backlog of orders increased to 53.5 from 52.5.
Respondents’ comments included:
"Purchasing remains a challenge as suppliers now seem to be trying to raise pricing at any sign of life in the economy." (Computer & Electronic Products)
"Business is picking up — lots of opportunities." (Primary Metals)
"Agricultural commodities continue to weaken, with the exception of the domestic and world sugar markets." (Food, Beverage & Tobacco Products)
"Automotive demand continues to be strong even after 'cash for clunkers.'" (Fabricated Metal Products)
"Business remains slow, with no sign of improvement again this month." (Nonmetallic Mineral Products)
