US Manufacturing Downshifts as Orders Shrink, ISM Data Show

By abbasanwarinfo Last updated Oct 3, 2022

In September, a measure of US manufacturing fell to its lowest level in more than two years. Orders fell for the third time in four months, bringing the measure closer to stagnation.

The Institute for Supply Management’s measure of factory activity dropped nearly 2 points to 50.9, which is the lowest since May 2020, according to data released Monday. A reading of 50 is the line between growth and shrinkage, and the September number was lower than the median estimate of 52 from a survey of economists by Bloomberg.

The purchasing manager’s group’s measure of new orders dropped more than 4 points to 47.1. This is the lowest level since the early months of the pandemic and shows that demand is falling. As the Federal Reserve raises interest rates to fight inflation, consumers are spending less on goods. Businesses are still investing in equipment, but there are more worries about economic growth.

ISM’s Manufacturing Business Survey Committee chair, said in a statement, “After four straight months of panelists’ companies reporting falling new order rates, the September index reading shows companies adjusting to the possibility of lower demand in the future.”

US Manufacturing Downshifts as Orders Shrink,

In September, nine industries that make things grew. Mineral products, machinery, and plastics grew the most. There was a drop in sales in seven industries, including furniture, textiles, and wood.

At the same time, a measure of the prices paid for materials used in making things has gone down for the sixth month in a row. At 51.7, the price index is at its lowest level since June 2020. This is likely because prices for oil, metals and other goods have gone down because of worries about a global recession. The ISM index of export orders fell by more than twice as much as it had in the past two years.

In addition to the drop in orders, the ISM’s composite gauge fell because factory employment and supplier deliveries also went down. Employment shrank for the fourth time in five months, which may be due to the fact that the job market is still tight and that demand has slowed down.

Select Business Remarks

“Concerns about a slowdown in the world economy are growing, and some customers are putting orders on hold.” Things made of chemicals

“Production is steady, so the backlog can be cut down even though demand has slowed a bit.” —Transportation Equipment

“Lead times are getting longer for almost all suppliers. It seems that nobody wants to keep stock anymore. — Food, beverages, and cigarettes

Because of inflation and interest rates, business is either flat or going down. Because competitors have raised their wages, it is hard to find and keep employees. ” Products Made of Metal

“There are still problems with the supply chain for many items, and staffing on the production side is still a big issue. On the other hand, we have more of some key items than we need, especially imports. ” Machinery

“Business is still going well. Some goods in the supply chain are starting to settle down, but others are still causing problems for production. We can’t run as smoothly as we’d like. —Electrical Equipment, Appliances & Components

“Business is still good. There are more raw materials available, and the prices of some raw materials are going down. ” Things made of plastic and rubber

Consumers are spending more of their extra money on services and less on goods, so manufacturers are getting the extra money they need to catch up on orders. ISM’s measure of backlogs fell to its lowest level since 2020.

This is making supply chains less stressful, as shown by a drop in the ISM index of supplier deliveries. Shipment times got longer, but at a slower rate than before the pandemic, which was in December 2019.

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