ISM Manufacturing PMI — September 2024
Headline: The ISM Manufacturing PMI was 47.2, unchanged from August, indicating continued contraction for the sixth consecutive month. The reading was below its prior six-month average of 48.4, though within the 46.8–50.3 range. Manufacturing remained below the 50.0 breakeven, while the overall economy continued to grow; the PMI was above the economy-wide breakeven level of 42.5.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo |
|---|---|---|---|---|---|
| New Orders | 46.1 | 44.6 | +1.5 | Contracting | below avg (47.9) |
| Production | 49.8 | 44.8 | +5.0 | Contracting | above avg (49.2) |
| Employment | 43.9 | 46.0 | -2.1 | Contracting | below avg (47.6) |
| Supplier Deliveries | 52.2 | 50.5 | +1.7 | Slowing | above avg (50.1) |
| Inventories | 43.9 | 50.3 | -6.4 | Contracting | 6-mo low |
| Customers' Inventories | 50.0 | 48.4 | +1.6 | About Right | 6-mo high |
| Prices | 48.3 | 54.0 | -5.7 | Decreasing | 6-mo low |
| Backlog of Orders | 44.1 | 43.6 | +0.5 | Contracting | above avg (43.5) |
| New Export Orders | 45.3 | 48.6 | -3.3 | Contracting | 6-mo low |
| Imports | 48.3 | 49.6 | -1.3 | Contracting | 6-mo low |
Key moves:
- Production rose 5.0 points to 49.8, above its six-month average but still just below the 50 breakeven; the improvement did not yet represent expansion.
- Inventories fell 6.4 points to 43.9, a six-month low, crossing from growth to contraction.
- Prices dropped 5.7 points to 48.3, a six-month low and a shift from rising to decreasing input costs. Customers’ inventories simultaneously reached a six-month high at 50.0, moving from “too low” to “about right.”
Insights:
- The production rebound was meaningful but incomplete: Production at 49.8 improved sharply while New Orders at 46.1 remained in contraction. The divergence points to stabilization in current output rather than a confirmed demand-led recovery.
- The inventory signal is contractionary rather than a constructive stocking cycle. Manufacturers’ inventories fell to 43.9 while New Orders remained below 50, consistent with inventory drawdown amid weak demand rather than deliberate accumulation for stronger future orders.
- Customers’ inventories at 50.0 are now “about right,” eliminating the prior six-month signal of inventories being too low. That is broadly neutral for the reorder pipeline and less supportive of near-term production than last month.
- Supplier Deliveries at 52.2 indicate slower deliveries, normally associated with stronger demand or supply constraints. However, weak New Orders and six-month lows in exports and imports suggest that the reading does not yet provide clear evidence of broad demand strength.
- Forward visibility remains weak: Backlog of Orders at 44.1 has contracted for 24 months, despite being slightly above its six-month average. The decline in Prices to 48.3 eases input-cost pressure and is supportive of manufacturers’ margins, while also reducing near-term goods-inflation pressure.
Breadth & prices: Five industries reported growth and none were listed as contracting. Input prices moved into decreasing territory, with the Prices index at 48.3, down from 54.0.
Takeaway: