Manufacturing Continues Recovery in September

Manufacturing Continues Recovery in September

Staffing Industry Analysts (10/1/20)

The manufacturing industry continued its recovery in September, with the overall economy notching a fifth consecutive month of growth, according to a report by the Institute for Supply Management based on a survey of supply chain executives in the US.

Employment in manufacturing continued to contract, but September marked the fifth consecutive month of improvement since the index’s low of 27.5% registered in April.

“After the coronavirus (Covid-19) pandemic brought manufacturing activity to historic lows, the sector continued its recovery in September,” said Timothy Fiore, chair of the ISM’s Manufacturing Business Survey Committee. “Survey Committee members reported that their companies and suppliers continue to operate in reconfigured factories and are becoming more proficient at maintaining output.”

The organization’s PMI composite index for manufacturing edged down to a level of 55.4.% in September from 56.0% in August, which marked the PMI’s highest level of expansion since November 2018. Readings above 50% indicated expansion in manufacturing while readings above 42.8%, over time, indicate expansion in the overall economy.

The PMI is based on the diffusion indexes of five indexes with equal weights: new orders, production, employment, supplier deliveries and inventories.

“Manufacturing performed well in the month with demand, consumption and inputs registering growth indicative of a normal expansion cycle,” Fiore said. “While certain industry sectors are experiencing difficulties that will continue in the near term, the manufacturing community as a whole has learned to conduct business effectively and deal with the variables imposed by the Covid-19 pandemic.”

The ISM’s manufacturing employment index improved to 49.6% in September, up from 46.4% in August. An Employment Index above 50.8%, over time, is generally consistent with an increase in the Bureau of Labor Statistics data on manufacturing employment.

“Long-term labor market growth remains uncertain, but strong new-order levels and an expanding backlog signify potential employment strength for the fourth quarter,” Fiore said. “Survey panelists’ comments indicate that there are significantly more companies hiring or attempting to hire than those that are reducing labor forces.”

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