Manufacturing Mood Hits 54.5%: Not a Recession, Just a Slightly Softer Sofa 🛋️

U.S. manufacturing activity expanded for a ninth consecutive month in September, with the Institute for Supply Management's Manufacturing PMI registering 54.5%, according to ISM. That figure came in below the 54.8% market forecast and slightly under August's 54.6% reading, though readings above 50% indicate growth and below that threshold indicate contraction. ISM said the September PMI historically corresponds with a 2.4% annualized increase in real gross domestic product, and the wider U.S. economy expanded for the 23rd consecutive month.

Demand strengthened during the month, with the New Orders Index climbing to 55.3% from 53.7% in August. The Backlog of Orders Index rose to 56.4% from 51.8%, while production growth eased as the Production Index fell to 56.7% from 58.3%, remaining in expansion for an 11th straight month. Manufacturing employment strengthened, with the Employment Index rising to 52.7% from 51.2%, a 1.5 percentage-point monthly increase. Eight of the 18 manufacturing industries reported employment growth in September, including computer and electronic products and transportation equipment.

Price pressures intensified more sharply, with the Prices Index jumping 6.8 percentage points to 77.9%. ISM reported the increase reflected higher costs across multiple inputs used by manufacturing supply chains during the month. The combination of firmer order books, expanding employment and rising input prices pointed to continued momentum in the sector even as headline growth moderated from August.