U.S. manufacturing companies indicated another month of relatively subdued growth in September, following the 22-month low recorded in August. Reflecting this, both output and new business volumes continued to expand at slower rates than those seen earlier in 2015, which contributed to a marked slowdown in job creation during the latest survey period. A renewed fall in input prices provided support to operating margins in September. That said, factory gate charges were unchanged over the month, which ended a three-year period of sustained output price inflation.
At 53.1 in September, the final headline seasonally adjusted Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) was up only fractionally from August’s 22-month low of 53.0. Although still above the neutral 50.0 threshold, the latest reading was one of the lowest recorded over the past two years, thereby indicating a relatively subdued improvement in overall business conditions in September. Of the five index components, a slowdown in employment growth since August was the main negative influence on the headline PMI.
September data pointed to a modest rebound in output growth from its 19-month low in August. However, the latest expansion of production volumes was still weaker than the post-crisis average, with survey respondents noting that the uncertain global economic outlook and softer demand conditions had acted as a brake on output at their plants.
New business levels increased overall in September, but the rate of growth remained subdued in comparison to those seen throughout much of the past two years. Manufacturers widely commented on cautious spending patterns among clients. Weak export sales remained a drag on total new orders across the manufacturing sector. That said, the latest survey indicated a slight rebound in new work from abroad and, although only marginal, the rate of expansion was the fastest since February.
Manufacturers indicated another slowdown in employment growth during September, with survey respondents citing the uncertain business outlook and reduced pressure on capacity. Moreover, the latest rise in staffing levels was the slowest in the current 27-month period of expansion. September data also highlighted ongoing caution in terms of stock levels, with post-production inventories falling for a second month running.
Meanwhile, average cost burdens decreased for the first time in five months during September, which survey respondents linked to the strong dollar and lower commodity prices on world markets. Factory gate prices were unchanged in September, which contrasted with the upward trend in charges recorded over the previous three years.