ISM Report: Manufacturing Continues Contraction, Records Best Performance Since November 2022

Manufacturing economic activity continued to contract for the 11th consecutive month in September, according to the Institute for Supply Management’s September 2023 manufacturing sector report. The September Purchasing Manager’s Index registered 49%, 1.4 percentage points higher than the figure reported in August.

“This is the 11th month of contraction, but the third month of positive change. Of the five subindexes that directly factor into the Manufacturing PMI, two (the production and employment indexes) are in expansion territory, up from none in August,” said Timothy Fiore, chair of the ISM’s manufacturing business survey committee. ISM's monthly report is based on a survey of manufacturing supply executives.

Although 2.4 percentage points higher than the August figure, the new orders index continues to contract at 49.2%. Anything lower than 50% represents contraction. On the other hand, the employment and production indexes registered growth, coming in at 51.2% and 52.5%, respectively.

Five industries reported growth last month: nonmetallic mineral products; food, beverage & tobacco products; textile mills; primary metals; and petroleum & coal products.

Multiple survey respondents emphasized the importance of keeping an eye on the evolving supply chain, with one survey respondent in miscellaneous manufacturing noting, “Overall, things continue to be very steady: Sales and revenue are as expected, and the supply environment has stabilized greatly versus 2021-22. Some things to watch include the Panama Canal (drought), U.S.-China relations, and the impact the UAW (United Auto Workers) strike could have on suppliers of ours who support automotive production. But overall conditions feel stable.”