Down from August, pace still gaining

Don Hogsett, Lauren Kellachan, October 13, 2003

Still improving, in fits and starts, economic activity in the manufacturing sector improved for a third straight month in September, but at a somewhat slower pace than during August, the nation's purchasing managers reported in a monthly canvass of more than 400 companies.

The Purchasing Managers Index prepared by the Institute of Supply Management (ISM) stood at 53.7 percent in September, down a full percentage point from a level of 54.7 percent in August, but still north of the benchmark level of 50.0 percent. Any reading above 50.0 percent indicates growth in manufacturing activity, while anything beneath that level points to a slowdown.

"The manufacturing sector continued to improve for the third consecutive month as new orders and production show evidence of a stronger economy in September," said Norbert Ore chairman of the ISM's Business Survey Committee. "Both of these indices have grown over the past five months, which is very encouraging considering the challenges that the economy has faced in the last two years."

In key highlights of the monthly report, the Backlog of Orders Index improved again in September, but manufacturing employment continues its long downward spiral, and has remained below the break-even point for 36 consecutive months. In a worrisome note to suppliers concerned about the bottom line and their ability to pass along price increases, the prices they pay for supplies rose for a 19th straight month. Exports continued to grow, rising for the 21st consecutive month; and imports grew as well, for an 11th straight month.

Comments from purchasing and supply managers indicate softness in many industries and concerns about energy prices," Ore commented. "It is hard to draw a consensus, as there are definitely winners and losers in this recovery."

September snapshot
Manufacturing benchmarks
month-over-month percentage-point change

Source: Institute for Supply Management
Purchasing Managers' Index -0.1%
New Orders 0.8
Production -4.3
Employment -0.2
Inventories 0.2
Customers' Inventories 1.5
Prices Manufactures Pay 3.0
Order Backlogs 1.0
Export Orders -2.4
Imports 5.6

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