U.S. manufacturing activity shrinks to its lowest level in nearly a year, producers may have passed the worst
Financial World 2023-10-02 23:30:59
An index measuring U.S. manufacturing activity shrank at its slowest pace in at least nearly a year in September, raising hope for U.S. producers that the worst may be behind them.
Data released on Monday showed that the Institute for Supply Management (ISM) manufacturing index rose to 49 from 47.6 in August, the highest level since November last year.
While the index was below 50, indicating contraction in manufacturing activity, the latest data exceeded the expectations of most economists surveyed by Bloomberg. After hitting multi-year lows in June, the index has gained 3 points, its biggest three-month gain since March 2021.
The September index was boosted by the strongest output growth since July 2022 and expansion of factory employment. A gauge of new orders also rose to its highest level in more than a year, although it still showed contraction.
A gauge of manufacturing employment expanded for the first time in four months, allowing manufacturers to move closer to clearing a backlog of orders.
Falling commodity prices also provided some relief to producers. The price indicator paid for raw materials fell by 4.6 points to 43.8 in September, the largest decline in four months.
Although the manufacturing sector has been shrinking for nearly a year, the pace of deterioration is slowing. Consumer spending remains resilient in the face of high borrowing costs and lingering inflation. In addition, recent government data showed that business demand for equipment rebounded in August.
Businesses are making progress in reducing inventories, and output growth is likely to continue. The ISM report showed a measure of customer inventories falling at the fastest pace in three months. Factory inventories also shrank.
Meanwhile, strikes targeting the three largest U.S. automakers threaten to slow progress in the industry, even as supply chains and prices continue to stabilize.
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2023-10-02 15:30:59
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