ISM manufacturing index slipped in September

The nation’s manufacturing sector showed softer-than-expected growth in September, according to a trade report on Wednesday.

The Institute for Supply Management manufacturing index slipped to 56.6 in September from 59 percent in August, indicating slowing expansion. The actual reading came below the economists’ estimate of 58.5, according to Bloomberg L.P.

ISM Manufacturing Index Chart
Chart created by Penny Yi Wang

“Zigs and zags are to be expected and no one should see the report as a sign of economic weakness,” said Brian Wesbury, Chief Economist at First Trust Portfolios.

An index reading above 50 indicates general expansion in the manufacturing industry; a reading below 50 indicates contraction, according to the ISM, a non-profit association that serves supply management professionals.

Economists say the report does not reflect a weakening in the manufacturing sector.

The index measures a variety of business barometers, such as production, inventory levels and export.

“Everything from new orders to production and employment remained in the black in September,” said Diane Swonk at Mesirow Financial in a blog post. The reading “suggests a continued, albeit slower, expansion in early September,” the Chicago-based economist said.

The prices paid index rose to 59.5 in September from 58.0 in August, with 13 out of 18 industries paying higher prices.

Of the 18 manufacturing industries in the survey, 15 reported overall growth in September. Machinery, plastic and rubber, and electrical equipment were in contraction.

The release of the September index was met by a 200-plus plunge in the Dow Jones Industrial Average on Wednesday.

The manufacturing index for October is scheduled for release on November 3.

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