The Manufacturing Purchasing Managers’ Index (PMI) came in at 47.2%. The report indicates that economic activity in the sector continues to contract. In September, new orders and backlogs continued to decline. Production and employment also declined. Supplier deliveries slowed, and raw material inventories shrank. Customer inventories were below demand, leading to lower prices. Exports and imports also declined.
According to Timothy R. Fiore, chairman of the Business Survey Committee, economic activity in manufacturing declined for the sixth straight month. This decline occurred for the 22nd time in the last 23 months, according to supply officials. The report was released from Tempe, Arizona on October 1, 2024, by the Institute for Supply Management. The Manufacturing PMI came in at 47.2% in September, the same as in August. The overall economy continued to expand for the 53rd month after contracting in April 2020.
New orders remained in contraction territory at 46.1%, up 1.5 points from August. The production index rose to 49.8%, up 5 points from 44.8% in August. The price index entered contraction territory for the first time this year, at 48.3%, down 5.7 points from August. The backlog of orders index was 44.1%, while the employment index fell to 43.9%, down 2.1 points from August.
Suppliers Deliveries Index Report – September
The suppliers’ deliveries index signaled a slowdown in deliveries, at 52.2%, up 1.7 points from August. A reading above 50% indicates a natural slowdown as the economy improves and demand increases. The inventories index was 43.9%, down 6.4 points from 50.3% in August. The new export orders index was 45.3%, down 3.3 points from 48.6% in August. The imports index also remained in contraction territory at 48.3%, down 1.3 points from 49.6% in August.
Manufacturing Activity Analysis – September
Timothy R. Fiore continues to point to a contraction in US manufacturing activity in September, at the same rate as last month. Demand remains weak, with output and inputs falling.
The slowdown in demand is reflected in several indicators:
- The new orders index remains in contraction territory.
- The new export orders index shrinks at a faster rate.
- The backlog of orders index remains in strong contraction territory.
- The customer inventories index indicates that inventories are balanced.
Output continued to contract, as employment fell at a faster rate, while production approached expansion. Companies are adjusting their workforces to expected demand. Inputs continue to support future demand growth, with inventories returning to low levels. Suppliers are struggling to meet customer needs.
Demand remains weak, as companies have shown hesitation in investing due to Federal Reserve monetary policy and election uncertainty. Production execution stabilized in September, with delivery times improving. Manufacturing GDP contracted 77% in September, up from 65% in August. 41% of manufacturing GDP recorded rates at or below 45%, indicating overall weakness. Only food, beverages and tobacco products expanded in September, compared with two industries in August.
Manufacturing Performance – September
Five manufacturing industries recorded growth in September:
- Petroleum and coal products
- Food, beverages and tobacco products
- Textiles
- Furniture and related products
- Miscellaneous manufacturing
Thirteen industries contracted, in order:
- Printing and related support activities
- Plastics and rubber products
- Wood products
- Clothing, leather and related products
- Primary metals
- Transport equipment
- Non-metallic mineral products
- Electrical equipment, appliances and components
- Paper products
- Machinery
- Chemical products
- Fabricated metal products
- Computer and electronics products These results show a mixed performance of industries, with some sectors recording a recovery while others face economic challenges.
Respondents’ Comments on the Market
Chemicals: North American demand is weak, while Asian demand is showing some upside with a negative outlook in the coming months.
Transportation Equipment: Global demand is weak, leading to a downgrade in Q4 forecasts and a delay in the transition to electric vehicles.
Food, Beverage & Tobacco: H2 2024 is on track to recover with record sales expected.
Computers & Electronics: Despite the slowdown, some companies continue to grow thanks to market adaptation strategies.
Machinery: Lower demand underscores the ongoing need for manufacturing adjustments to balance production.
Fabricated Metal Products: Q4 is expected to be slower than expected, with the impact of interest rate adjustments to be felt in Q1 2025. These comments show a divergence in views and expectations about future trends across sectors.
“The situation is stable. We are waiting for interest rate cuts and the outcome of the November election before we confirm our plans for 2025. We are currently planning for a stable situation in 2025.” [Furniture & Related Products]
Commodity Prices Rise:
Aluminum* (10); Corrugated Board (3); Corrugated Boxes (3); Electrical Components (5); Marine Freight (5); Plastic Resins (9); Polypropylene Resins (3); Steel Products*; and Synthetic Fibers.
Commodity Prices Decline:
Aluminum* (2); Copper (3); Crude Oil; Diesel Fuel; Steel (5); Steel – Stainless; and Steel Products (4).
Short Supply Commodities
Electrical Components (48); and Electronic Components (6). Our sales remain stable. Our customers tell us that while our products are performing well, they are having to look for lower-cost components to maintain their sales. “[Textiles] Sales have slowed this quarter compared to the same period last year. We have adjusted production accordingly.” [Miscellaneous Manufacturing] Hiring continues for production/administration positions. No new jobs have been added. Automotive OEMs are slowing or canceling orders. The pace is slowing.” [Primary Metals]
