ing growth in production for the 37th consecutive month.
An index above 51.1 percent, over time, is generally
consistent with an increase in the Federal Reserve Board’s
Industrial Production figures.
“The new orders and production components fell by
a significant 1.6 and 1.8 percentage points, respectively,
although both are still advancing,” Waldman explains.
“Nonetheless, a sharp fall of 5 percentage points in the
backlog of orders, to 41.5 percent, a number that is deep
in contraction territory, suggests that there is little pressure on the production schedule and thus manufacturing
output gains are likely to be weak over
Exports, Imports and Prices
ISM’s New Export Orders Index registered 46.5 percent in September, which
was the same reading as in August. This
is the fourth consecutive month that the
survey panel indicated their new export
ISM’s Imports Index registered 50.5
percent in September, which is 1 percentage point lower than the 51.5 percent
reported in August. This month’s reading represents 32 consecutive months of
growth in imports.
“With the global economy experienc-
ing its most difficult year since the Great
Recession, risks for U.S. factory perfor-
mance are all to the downside,” Wald-
man cautions. “Major economies such as
Brazil, Russia, Japan and Canada are in
recession. The dramatic slowing in Chi-
nese economic growth, through its im-
pact on commodities exporters and Asian
industrial performance, is exacerbating
a bleak world picture. And with a high
dollar, U.S. goods producers are dealing
with difficult price competiveness issues
on top of weak demand.”
The ISM Prices Index registered 38 per-
cent in September, which is 1 percentage
point lower than in August, indicating a
decrease in raw materials prices for the
11th consecutive month.
“Prices dropping for eleven months in
a row is highly unusual and it all cor-
relates to the price of oil, and relatedly
to the price of plastics which contain pe-
troleum, plus the metals complex which
uses petroleum to produce metals,” says
Holcomb. “For the oil and gas industry,
it’s not good news. They have to pull
back, lay off employees, and projects are being cancelled.
But for most of the rest of our industries, it means lower
raw material prices and lower costs to run their factories. In
that sense, it’s a benefit to manufacturing.
“We’re at a soft point where people are uncertain which
way things are going. This month’s PMI is really a reflection
of that uncertainty, but it looks like it’s ticking up if you
look at consumer confidence. Manufacturing has to catch
up with that through new orders,” Holcomb concludes.
For more information on the Institute for Supply Man-
agement, visit www.ism.ws.
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