TEMPE, AZ - The furniture industry ranked third in growth in September, second in employment growth, and was "the only industry reporting an increase in order backlogs," says the Institute for Supply Management. Furniture also reported the fastest growth in exports for September, in the ISM monthly report, summarized here:
Economic activity in the manufacturing sector expanded in September for the 33rd consecutive month, and the overall economy grew for the 76th consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.
The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. "The September PMI registered 50.2 percent, a decrease of 0.9 percentage point from the August reading of 51.1 percent. The New Orders Index registered 50.1 percent, a decrease of 1.6 percentage points from the reading of 51.7 percent in August.
The Production Index registered 51.8 percent, 1.8 percentage points below the August reading of 53.6 percent. The Employment Index registered 50.5 percent, 0.7 percentage point below the August reading of 51.2 percent. Backlog of Orders registered 41.5 percent, a decrease of 5 percentage points from the August reading of 46.5 percent. The Prices Index registered 38 percent, a decrease of 1 percentage point from the August reading of 39 percent, indicating lower raw materials prices for the 11th consecutive month. The New Export Orders Index registered 46.5 percent, the same reading as in August. Comments from the panel are mixed with some concern about the global economy and customer confidence."
Of the 18 manufacturing industries, seven are reporting growth in September in the following order: Printing & Related Support Activities; Textile Mills; Furniture & Related Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Paper Products; and Nonmetallic Mineral Products.
PMI®
Manufacturing expanded in September as the PMI® registered 50.2 percent, a decrease of 0.9 percentage point from the August reading of 51.1 percent, indicating growth in manufacturing for the 33rd consecutive month. The September PMI is the lowest reading since May 2013 when the PMI registered 50.1 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI® in excess of 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the September PMI® indicates growth for the 76th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 33rd consecutive month. Holcomb stated, "The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through September (52.2 percent) corresponds to a 2.9 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for September (50.2 percent) is annualized, it corresponds to a 2.2 percent increase in real GDP annually."
The seven industries reporting growth in new orders in September — listed in order — are: Printing & Related Support Activities; Textile Mills; Furniture & Related Products; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Chemical Products; and Miscellaneous Manufacturing. The nine industries reporting a decrease in new orders during September — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Wood Products; Transportation Equipment; Petroleum & Coal Products; Nonmetallic Mineral Products; Machinery; Fabricated Metal Products; and Electrical Equipment, Appliances & Components.
Production
ISM®'s Production Index registered 51.8 percent in September, which is a decrease of 1.8 percentage points when compared to the 53.6 percent reported in August, indicating growth in production for the 37th consecutive month. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.
The nine industries reporting growth in production during the month of September — listed in order — are: Printing & Related Support Activities; Nonmetallic Mineral Products; Furniture & Related Products; Food Beverage & Tobacco Products; Miscellaneous Manufacturing; Paper Products; Plastics & Rubber Products; Chemical Products; and Fabricated Metal Products. The seven industries reporting a decrease in production during September — listed in order — are: Primary Metals; Apparel, Leather & Allied Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Machinery; Transportation Equipment; and Computer & Electronic Products.
Employment
ISM®'s Employment Index registered 50.5 percent in September, which is a decrease of 0.7 percentage point when compared to the 51.2 percent reported in August, indicating growth in employment for the fifth consecutive month. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Of the 18 manufacturing industries, in September, eight industries reported employment growth in the following order: Printing & Related Support Activities; Furniture & Related Products; Paper Products; Nonmetallic Mineral Products; Machinery; Food, Beverage & Tobacco Products; Transportation Equipment; and Miscellaneous Manufacturing. The nine industries reporting a decrease in employment in September — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Fabricated Metal Products; Primary Metals; Plastics & Rubber Products; and Chemical Products.
Customers' Inventories*
ISM®'s Customers' Inventories Index registered 54.5 percent in September, an increase of 1.5 percentage points from August when customers' inventories registered 53 percent. September's reading indicates that customers' inventories are considered to be too high for the second consecutive month.
The nine manufacturing industries reporting customers' inventories as being too high during the month of September — listed in order — are: Primary Metals; Furniture & Related Products; Nonmetallic Mineral Products; Chemical Products; Computer & Electronic Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Machinery; and Transportation Equipment. The two industries reporting customers' inventories as too low during September are: Apparel, Leather & Allied Products; and Plastics & Rubber Products. Six industries reported no changes in customers' inventories in September compared to August.
The ISM® Prices Index registered 38 percent in September, which is 1 percentage point lower than in August, indicating a decrease in raw materials prices for the 11th consecutive month. In September, 6 percent of respondents reported paying higher prices, 30 percent reported paying lower prices, and 64 percent of supply executives reported paying the same prices as in August. A Prices Index above 52.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.
Backlog of Orders*
ISM®'s Backlog of Orders Index registered 41.5 percent in September, a decrease of 5 percentage points as compared to the August reading of 46.5 percent. Of the 88 percent of respondents who measure their backlog of orders, 13 percent reported greater backlogs, 30 percent reported smaller backlogs, and 57 percent reported no change from August.
The only industry reporting an increase in order backlogs in September is Furniture & Related Products. The 16 industries reporting a decrease in order backlogs during September — listed in order — are: Primary Metals; Apparel, Leather & Allied Products; Textile Mills; Nonmetallic Mineral Products; Petroleum & Coal Products; Paper Products; Wood Products; Transportation Equipment; Plastics & Rubber Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Machinery; Computer & Electronic Products; Fabricated Metal Products; Chemical Products; and Food, Beverage & Tobacco Products.
The five industries reporting growth in new export orders in September are: Furniture & Related Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Chemical Products; and Fabricated Metal Products. The 11 industries reporting a decrease in new export orders during September — listed in order — are: Wood Products; Petroleum and Coal Products; Paper Products; Apparel, Leather & Allied Products; Primary Metals; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Machinery; Transportation Equipment; Food, Beverage & Tobacco Products; and Computer & Electronic Products.
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