Manufacturing Has Strong September
October 10, 2005,
Tempe, Ariz. — Staging a major rally and rebounding from weakness the month before, the manufacturing sector expanded sharply faster than expected during September, even though higher raw material prices continued to surge, raising fears about margins, profits and inflation going forward, the nation's purchasing managers reported.
A reading above 50 percent points to expansion in the manufacturing sector, while anything beneath indicates a pullback.
The big September surge was driven by strong gains in the indices for new orders and production, both of which climbed more than 7 percent. In more good news, customers' inventories were down 2 percent, suggesting their need to re-order, and order backlogs grew 4.5 percent.
The major blemish in the monthly report was a continued surge in raw material prices. The September Prices Index jumped 15.5 percent to a reading of 78 percent, after rising more then 14 percent in August, potentially putting a squeeze on manufacturer margins and profits going forward.
“While energy prices and the impact from Hurricane Katrina are major concerns, the manufacturing sector has regained significant momentum,” said Norbert Ore of the purchasing managers' trade group.
Month-over-month percentage-point change
|Source: Institute for Supply Management
|Purchasing Managers' Index||5.8%|
|Cost of Supplies||15.5|