US ISM Manufacturing PMI exhibited an encouraging uptick in September, climbing to 49.0 from 47.6, surpassing the anticipated 47.9. Although the manufacturing sector is still in the grip of contraction, the pace has slackened, marking the sector’s finest performance since November 2022. September’s reading marks the 11th consecutive month of contraction, but also the third month showcasing an improvement.
Diving into the particulars, several key indices within the PMI reported positive shifts. New orders swelled to 49.2 from 46.8, and production amplified its reach, moving from 50.0 to 52.5. Furthermore, the employment index turned the corner, ascending from 48.5 to 51.2, signalling an uplift in hiring within the sector. However, not all indices saw a rise. The prices index experienced a substantial dip, plummeting from 48.4 to 43.8, reflecting a significant reduction in input costs.
When examining the historical correlation between the Manufacturing PMI and the broader economy, September’s 49.0 reading translates to a 0.1% increase in real gross domestic product on an annualized basis. It implies that, despite the continued contraction, the manufacturing sector’s decline is moderating, potentially heralding a turning point in upcoming months.
