- REUTERS/Michael Spooneybarger
The US manufacturing sector rebounded from contraction in September, according to the Institute of Supply Management.
The purchasing manager’s index (PMI) was 51.5, up from a contractionary reading of 49.4 in August, which was the first slip since February.
Some respondents reported a rise in domestic and international sales, with some customers buying ahead of anticipated price increases.
The index is based on a survey of purchasing managers, and showed that employment remained in contraction although it improved from August.
“The September PMI release breathes a sigh of relief to growth concerns given the survey’s abrupt deterioration in August,” said Brittany Baumann, a macro strategist at TD Securities.
“Besides the headline index, which is consistent with its 6m trend, the details were broadly supportive of continued expansion in manufacturing activity and suggests that the August drops were likely a blip.”
New orders and production also recovered from contraction, with their gauges rising above the critical 50 level.
According to Markit Economics’ separate report, the US manufacturing sector “slowed to a crawl” in September.
The firm’s PMI for the month was 51.5, little changed from its preliminary ‘flash’ reading of 51.4 released last month.
“The survey saw firms pulling back on expanding production and focusing instead on cost-cutting, as inflows of new business slowed to the weakest seen so far this year,” said Chris Williamson, chief business economist at IHS Markit, in the release.
“Any growth is largely being driven by the consumer, in turn helped by tail-winds of low interest rates, low inflation and a solid labor market.”
Unlike decades ago, manufacturing makes a smaller contribution to the US economy, compared to the services sector. During 2015, it entered a steep downturn as the rising dollar made it more expensive for foreign buyers to purchase US exports.
The sector’s recovery has been slow and uneven.