Manufacturing expands for first time in four months

| October 02, 2012

Economic activity in the manufacturing sector expanded in September following three consecutive months of slight contraction, and the overall economy grew for the 40th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business released Monday. Oct. 1.

The overall PMI registered 51.5 percent, an increase of 1.9 percentage points from August’s reading of 49.6 percent, indicating a return to expansion after contracting for three consecutive months. A reading above 50 percent indicates that the manufacturing economy generally is expanding; below 50 percent indicates that it generally is contracting. A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy.

The New Orders Index registered 52.3 percent, an increase of 5.2 percentage points when compared to the August reading of 47.1 percent, representing a return to growth in new orders following three consecutive months of contraction. A New Orders Index above 52.3 percent, over time, generally is consistent with an increase in the Census Bureau’s series on manufacturing orders.

ISM’s Production Index registered 49.5 percent in September, an increase of 2.3 percentage points when compared to the 47.2 percent reported in August, indicating contraction in production for the second time since May 2009 when the Production Index registered 43.9 percent. An index above 51.2 percent, over time, generally is consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

“Comments from the panel reflect a mix of optimism over new orders beginning to pick up, and continued concern over soft global business conditions and an unsettled political environment,” said Bradley Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee.

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