by Bill McBride on 10/01/2010 10:00:00 AM
Friday, October 01, 2010
PMI at 54.4% in September down from 56.3% in August. The consensus was for a decline to 54.5 percent.
From the Institute for Supply Management: September 2010 Manufacturing ISM Report On Business®
The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "While the headline number shows relative strength this month as the PMI reading of 54.4 percent is still quite positive, the overall picture is less encouraging. The growth of new orders continued to slow, as the index is down significantly from its cyclical high of 65.9 percent (January 2010). Production is currently growing at a faster rate than new orders, but it typically lags and would be expected to weaken further in the fourth quarter. Manufacturing has enjoyed a stronger recovery than other sectors of the economy, but it appears that weaker growth is the expectation for the fourth quarter. Both the Inventories and Backlog of Orders Indexes are sending strong negative signals of weakening performance in the sector."Click on graph for larger image in new window.
Here is a long term graph of the ISM manufacturing index.
In addition to the decrease in the PMI, the ISM's new orders index fell to 51.1 from 53.1 in August, and the production index declined to 56.5 from 59.9.
The employment index declined to 56.5 from 60.4 in August.
And the inventory index was up for the 3rd month in a row to 55.6 from 51.4.
With new order growth slowing, and inventory increasing - further declines in the ISM PMI are very likely. Or as Ore noted, these indexes are "sending strong negative signals of weakening performance in the [manufacturing] sector".
Posted by Bill McBride on 10/01/2010 10:00:00 AM