U.S. Manufacturers Feel Contraction
October 16, 2006,
U.S. manufacturing activity barely grew in September, purchasing managers reported in their monthly canvass of smokestack America.
The index measuring customers' inventories rose by 3.0%. This suggests a future slowdown in manufacturing to match slowed demand.
The one bright spot was the price manufacturers pay for supplies and raw materials, where the index fell by 12.0%, to a reading to 61.0, indicating prices are rising less rapidly.
In a deep decline, the order backlogs index fell to 46.5, down from 51.5 in August. Employment fell 49.4 from 54.0 the preceding month. Production slowed by half a percentage point, to a reading of 56.1.
Imports rose by 2.0 percentage points to 56.0 in September, as exports cooled by 0.4 percentage points to a reading of 55.3.
Asked for views, a chemical products supplier said, “Lower energy prices should have a beneficial effect, but none has been seen so far.” An electronics producer said, “Business remains sluggish — new order rate and size of orders is low.” A wood products supplier said, “Within the past two weeks, seeing serious downturn in customer orders related to the housing market downturn.”
“Manufacturing is losing momentum and feeling the effects of higher interest rates and a weaker housing market,” said Norbert Ore, chairman of the ISM Manufacturing Business Survey Committee.
Month-over-month percentage point change
|Source: Institute for Supply Management
|Purchasing Managers' Index||-1.6%|
|Prices Manufacturers Pay||-12.0|