DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of September 2009.

Economic activity in the manufacturing sector expanded in September for the second consecutive month, and the overall economy grew for the fifth consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “The manufacturing sector grew for the second consecutive month in September. While the rate of growth moderated slightly when compared to August, the recovery broadened as the number of industries reporting growth increased from 11 to 13. Both new orders and production are growing, but at a slower rate when compared to August. It appears the fundamentals for continuing recovery are still at work as inventories and sales are gaining balance. This month, we asked a special question with regard to the American Recovery and Reinvestment Act. Twelve of the 18 manufacturing industries expect to derive some benefit from the program, and 12 manufacturing industries responded that they expect their companies to see some benefit.”

PERFORMANCE BY INDUSTRY

In September, 13 of the 18 manufacturing industries reported growth. The industries — listed in order — are: Wood Products; Paper Products; Apparel, Leather & Allied Products; Transportation Equipment; Textile Mills; Printing & Related Support Activities; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Chemical Products; Computer & Electronic Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The four industries reporting contraction in September are: Primary Metals; Furniture & Related Products; Plastics & Rubber Products; and Machinery.

WHAT RESPONDENTS ARE SAYING …

  • “Purchasing remains a challenge as suppliers now seem to be trying to raise pricing at any sign of life in the economy.” (Computer & Electronic Products)
  • “Business is picking up — lots of opportunities.” (Primary Metals)
  • “Agricultural commodities continue to weaken, with the exception of the domestic and world sugar markets.” (Food, Beverage & Tobacco Products)
  • “Automotive demand continues to be strong even after ‘cash for clunkers.’” (Fabricated Metal Products)
  • “Business remains slow, with no sign of improvement again this month.” (Nonmetallic Mineral Products)

MANUFACTURING AT A GLANCE

SEPTEMBER 2009

                       
Index

Series
Index
September

Series
Index
August

Percentage
Point
Change

Direction

Rate of
Change

Trend(a)
(Months)

 
PMI 52.6 52.9 -0.3 Growing Slower 2
New Orders 60.8 64.9 -4.1 Growing Slower 3
Production 55.7 61.9 -6.2 Growing Slower 4
Employment 46.2 46.4 -0.2 Contracting Faster 14
Supplier Deliveries 58.0 57.1 +0.9 Slowing Faster 4
Inventories 42.5 34.4 +8.1 Contracting Slower 41
Customers’ Inventories 39.0 39.0 0 Too Low Same 6
Prices 63.5 65.0 -1.5 Increasing Slower 3
Backlog of Orders 53.5 52.5 +1.0 Growing Faster 2
Exports 55.0 55.5 -0.5 Growing Slower 3
Imports 52.0 49.5 +2.5 Growing From Contracting 1
OVERALL ECONOMY

Manufacturing Sector

Growing Slower 5
Growing Slower 2

(a) Number of months moving in current direction

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price

Aluminum (3); Copper (4); Copper Based Products (3); Diesel Fuel; Plastic Products; Polypropylene (3); PVC; Stainless Steel (2); Stainless Steel Products (2); Steel (3); and Steel Products (3).

Commodities Down in Price

No commodities are reported down in price.

Commodities in Short Supply

Electronic Components is the only commodity reported in short supply.

Note: The number of consecutive months the commodity is listed is indicated after each item.

SEPTEMBER 2009 MANUFACTURING INDEX SUMMARIES

PMI

The recovery in manufacturing continues as the PMI registered 52.6 percent in September, which is 0.3 percentage point lower than the 52.9 percent reported in August, and the second month of expansion following 18 months of decline. 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 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the fifth consecutive month in the overall economy, as well as expansion in the manufacturing sector for the second consecutive month since January 2008. Ore stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through September (43.3 percent) corresponds to a 0.7 percent increase in real gross domestic product (GDP). However, if the PMI for September (52.6 percent) is annualized, it corresponds to a 3.6 percent increase in real GDP annually."

THE LAST 12 MONTHS

          Month                     PMI                             Month                     PMI
 
Sep 2009 52.6 Mar 2009 36.3
Aug 2009 52.9 Feb 2009 35.8
Jul 2009 48.9 Jan 2009 35.6
Jun 2009 44.8 Dec 2008 32.9
May 2009 42.8 Nov 2008 36.6
Apr 2009 40.1 Oct 2008 38.7
Average for 12 months – 41.5

High – 52.9

Low – 32.9

New Orders

ISM’s New Orders Index registered 60.8 percent in September, 4.1 percentage points lower than the 64.9 percent registered in August. This is the third consecutive month of growth in the New Orders Index. A New Orders Index above 48.8 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The 13 industries reporting growth in new orders in September — listed in order — are: Textile Mills; Paper Products; Petroleum & Coal Products; Apparel, Leather & Allied Products; Wood Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Fabricated Metal Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Chemical Products; Food, Beverage & Tobacco Products; and Transportation Equipment. The four industries reporting decreases in new orders in September are: Primary Metals; Machinery; Nonmetallic Mineral Products; and Furniture & Related Products.

New Orders           %Better         %Same         %Worse         Net         Index
 
Sep 2009 42 38 20 +22 60.8
Aug 2009 43 41 16 +27 64.9
Jul 2009 33 45 22 +11 55.3
Jun 2009 28 48 24 +4 49.2

Production

ISM’s Production Index registered 55.7 percent in September, which is a decrease of 6.2 percentage points from the August reading of 61.9 percent. An index above 50.4 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures. This is the fourth consecutive month the Production Index has registered above 50 percent.

The 11 industries reporting growth in production during the month of September — listed in order — are: Paper Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Wood Products; Transportation Equipment; Printing & Related Support Activities; Chemical Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Fabricated Metal Products; and Food, Beverage & Tobacco Products. The three industries reporting decreases in production in September are: Primary Metals; Furniture & Related Products; and Computer & Electronic Products.

Production           %Better         %Same         %Worse         Net         Index
 
Sep 2009 36 46 18 +18 55.7
Aug 2009 43 39 18 +25 61.9
Jul 2009 33 50 17 +16 57.9
Jun 2009 32 46 22 +10 52.5

Employment

ISM’s Employment Index registered 46.2 percent in September, which is 0.2 percentage point lower than the 46.4 percent reported in August. This is the 14th consecutive month of decline in employment. An Employment Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Three of the 18 manufacturing industries reported growth in employment in September: Apparel, Leather & Allied Products; Wood Products; and Transportation Equipment. The 10 industries that reported decreases in employment during September — listed in order — are: Primary Metals; Plastics & Rubber Products; Nonmetallic Mineral Products; Furniture & Related Products; Machinery; Chemical Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Computer & Electronic Products.

Employment           %Higher         %Same         %Lower         Net         Index
 
Sep 2009 15 62 23 -8 46.2
Aug 2009 13 68 19 -6 46.4
Jul 2009 11 70 19 -8 45.6
Jun 2009 9 66 25 -16 40.7

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in September as the Supplier Deliveries Index registered 58 percent, which is 0.9 percentage point higher than the 57.1 percent registered in August. This is the fourth consecutive month the Supplier Deliveries Index has been above 50 percent, following eight months of faster delivery performance. A reading above 50 percent indicates slower deliveries.

The nine industries reporting slower supplier deliveries in September — listed in order — are: Printing & Related Support Activities; Plastics & Rubber Products; Fabricated Metal Products; Nonmetallic Mineral Products; Computer & Electronic Products; Paper Products; Transportation Equipment; Machinery; and Chemical Products. The two industries reporting faster deliveries in September are: Primary Metals; and Food, Beverage & Tobacco Products.

Supplier Deliveries           %Slower         %Same         %Faster         Net         Index
 
Sep 2009 24 71 5 +19 58.0
Aug 2009 18 79 3 +15 57.1
Jul 2009 14 80 6 +8 52.0
Jun 2009 8 87 5 +3 50.6

Inventories

Manufacturers’ inventories contracted at a slower rate in September as the Inventories Index registered 42.5 percent. The index is 8.1 percentage points higher than the August reading of 34.4 percent. An Inventories Index greater than 42.6 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis’ (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

Two of the 18 manufacturing industries reported higher inventories in September: Wood Products; and Food, Beverage & Tobacco Products. The 12 industries that reported decreases in inventories in September — listed in order — are: Plastics & Rubber Products; Computer & Electronic Products; Paper Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Primary Metals; Machinery; Fabricated Metal Products; Chemical Products; Miscellaneous Manufacturing; and Transportation Equipment.

Inventories           %Higher         %Same         %Lower         Net         Index
 
Sep 2009 14 55 31 -17 42.5
Aug 2009 14 44 42 -28 34.4
Jul 2009 5 55 40 -35 33.5
Jun 2009 8 46 46 -38 30.8

Customers’ Inventories(b)

The ISM Customers’ Inventories Index registered 39 percent in September, the same rate of decline reported in August. The index indicates that respondents believe their customers’ inventories are too low at this time. This is the sixth consecutive month the Customers’ Inventories Index has been below 50 percent, following eight months above 50 percent.

Two industries reported higher customers’ inventories during September: Food, Beverage & Tobacco Products; and Machinery. The 12 industries that reported lower customers’ inventories during September — listed in order — are: Plastics & Rubber Products; Paper Products; Wood Products; Transportation Equipment; Computer & Electronic Products; Nonmetallic Mineral Products; Printing & Related Support Activities; Chemical Products; Miscellaneous Manufacturing; Fabricated Metal Products; Primary Metals; and Electrical Equipment, Appliances & Components.

Customers’ Inventories    

%
Reporting

   

%Too
High

   

%About
Right

   

%Too
Low

    Net     Index
 
Sep 2009 71 9 60 31 -22 39.0
Aug 2009 75



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