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(CEP News) - The U.S. manufacturing index is expected to remain broadly unchanged from conditions seen in the previous three months. The consensus is looking for a 49.5 reading, a figure equivalent to the current six-month average, representing marginal declines in the sector, but consistent with growth in the broader economy.
Of the 72 economists polled by Bloomberg, the range of forecast varies from 48.0 to 51.1. Figures above 50 are an indication of growth in the sector, while a reading below 50 indicates slowdown. The economics team at Desjardins said the last few months have been "remarkably stable" for the survey, and this month the index should continue to oscillate around 50. The main components of the survey have also been relatively stable in recent months, but the prices paid index has fallen from a cyclical high of 91.5 in June to 77.0 in August - the slowest pace since February. Economists expect further moderation to 73.0 in September. On a gloomier note, analysts at Global Insight say the index should slip to 48.5 due to the effects of Hurricane Ike, as well as the strike at Boeing. "Ongoing softening in energy prices should dampen the prices reading further, but the item to watch will be (once again) export orders-they are the last prop supporting the economy and are under threat from a faltering world economy," they said. In recent months, exports have been growing at a considerable pace, averaging 57.2 in the past six months. In contrast, new orders have been in decline for the past nine months, with the current six-month average at 47.6. Regional manufacturing surveys were fairly mixed this month. The Philly Fed index broke a nine-month trend of slowdown and surprised to the upside, while the Chicago business barometer remained in solid growth, and the less influential Milwaukee ISM improved by three points even though it failed to break into positive territory. On the downside, the Empire State survey came in worse than anticipated, the Richmond Fed survey slowed for the third straight month (with all broad components in negative territory), and the Kansas City index plummeted. Looking at the national level, Scott Brown, chief economist from Raymond James, said the U.S. manufacturing sector remains weak but not recessionary. According to the ISM's own data, a headline reading above 41.1, over time, is generally consistent with expansion in the overall economy. In the August report, Norbert Ore, who chairs the ISM's survey committee, said the current state of manufacturing is consistent with a growing economy. "The past relationship between the PMI and the overall economy indicates that the average PMI for January through August (49.5 percent) corresponds to a 2.6 percent increase in real gross domestic product," he said. The ISM manufacturing survey for September will be released at 10 a.m. EDT. By Patrick McGee,
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