Ongoing Expansion in the U.S. Manufacturing, ISM

By Economics Monitor

Oct 01 2014, 12:21 PM EDT

After a very strong August the expansion in the U.S. manufacturing industry cooled a bit in September The Institute for Supply Management said the PMI slowed to 56.6 from 59 in August.

The U.S. Manufacturing PMI registered 56.6 percent, a decrease of 2.4 percentage points from August’s reading of 59 percent, indicating continued expansion in manufacturing, the Institute for Supply Management reported.

The ISM numbers were quite below the expectations of 58.6 percent. A reading above 50 indicates expansion in the manufacturing sector.

According to ISM the New Orders Index went down from 66.7 percent in August to 60.0 percent in September. Also the Employment Index slowed significantly. It rested at 54.6 percent in September, down from 58.1 percent in August.

PMI from Markit Economics also down

Markit Economics published its numbers about the U.S. Manufacturing PMI just 15 minutes before the ISM. Adjusted for seasonal influences, the final U.S. Manufacturing PMI registered 57.5 in September, down slightly from 57.9 in August.

Markit says that the Manufacturing production increased sharply in September, although the rate of expansion eased to a four-month low.

According to the report the respondents widely commented on improving underlying economic conditions. Strong overall new business gains were supported by one of the fastest increases in new export orders seen over the past three years.

Chris Williamson, Chief Economist at Markit said, that the final PMI is signaling “a slight loss of growth momentum in manufacturing compared to August. However, this slowing needs to be put in the context of the rapid pace of growth seen in recent months.” In fact the September PMI rounds off the strongest quarter recorded by Markit since the financial crisis.

ADP job gains

The growth in the manufacturing industry goes hand in hand with the strong improvement at the employment market. For the sixth months the U.S. economy was adding more than 200K jobs.

Earlier at Wednesday, the ADP Employment Change report came out saying that the factory sector added 35K jobs in September. Under ADP's calculations, the job gain was the highest number since May 2010.

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