The Institute for Supply Management (ISM) manufacturing index of United State fell 0.9 points to 50.2 in September. The reading was below consensus expectations, which called for a lesser pullback to 50.6.
"Most subcomponents experienced declines, led by the backlog of orders (down 5.0 pts to 41.5), production (down 1.8 pts to 51.8), and new orders (down 1.6 pts to 50.1). Imports (down 1.0 pts to 50.5), prices paid (down 1.0 pts to 38.0) and employment (down 0.7 pts to 50.5) also pulled back somewhat on the month. The export index was unchanged, but remained in contractionary territory at 46.5. Inventories were unchanged at 48.5, while the customers inventory sub-index rose by 1.5pts to 54.5", notes TD Economics.
There is no doubt that this report is a disappointment, both in terms of the weak headline print, as well as the breadth of the weakness. The declines were widely felt across key sub-components with many showing little to no expansion whatsoever, and with a majority of industries reporting declines.
Moreover, the small spread between new orders and inventories suggests that manufacturing will likely remain subdued through year end, says TD Economics.
