September 2011 ISM Reports

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The pace of growth in manufacturing accelerated slightly in September, with the Institute for Supply Management’s (ISM) PMI rising to 51.6 percent, from 50.6 in August (50 percent is the breakpoint between contraction and expansion). After reciting some report details, Bradley Holcomb, chair of ISM’s Manufacturing Business Survey Committee, wrapped up his comments by saying, “Comments from respondents generally reflect concern over the sluggish economy, political and policy uncertainty in Washington, and forecasts of ongoing high unemployment that will continue to put pressure on demand for manufactured products."
 

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The non-manufacturing sector grew at a somewhat slower pace in September, reflected by a 0.3 percentage point drop (to 53.0 percent) in the non-manufacturing index (now known simply as the “NMI”). "Respondents' comments reflect an uncertainty about future business conditions and the direction of the economy,” concluded Anthony Nieves, chair of ISM’s Non-Manufacturing Business Survey Committee.
 

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The situation for Wood Products improved, with increases in new and backlogged orders, production and employment; the only “downside” was an increase in inventories. Paper Products contracted, although the “bad news” was concentrated in higher input prices and new, backlogged and export orders. Nonetheless, one Paper Products respondent wrote that "orders remain consistent and steady -- no sign of lower demand."

Construction was the only industry among the three we track in the service sector to report expansion during September. Ag & Forestry remained unchanged while Real Estate contracted.

As the bar chart and table above indicate, the rate of input price increases was mixed during September: it accelerated (+0.5 percentage point) for manufacturing and slowed (-2.3 percentage points) for the service sector (again, 50 is the breakpoint between rising and falling prices).

Paper was the only relevant commodity up in price during September; corrugated containers and natural gas were down in price. Some respondents indicated paying more for diesel fuel and gasoline while others paid less. Diesel fuel was the only relevant commodity described as being in short supply.