The report was issued October 1 by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee.
"The PMI indicates a significantly faster rate of decline in manufacturing during September, marking a departure from the 2008 trend toward negligible growth or contraction each month," said Ore. "This is the lowest level for the PMI since October 2001. This month's report is showing prices rising at a much slower rate, as the Prices Index fell to the lowest level in 21 months. Export orders continued to increase, but at a slower rate than in August."
The six industries reporting growth in September — listed in order — are: Petroleum & Coal Products; Paper Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Computer & Electronic Products; and Chemical Products. The industries reporting contraction in September are: Nonmetallic Mineral Products; Textile Mills; Wood Products; Furniture & Related Products; Apparel, Leather & Allied Products; Machinery; Transportation Equipment; Primary Metals; Fabricated Metal Products; Printing & Related Support Activities; Plastics & Rubber Products; and Electrical Equipment, Appliances, & Components.
| MANUFACTURING AT A GLANCE SEPTEMBER 2008 | ||||||
|---|---|---|---|---|---|---|
Index |
Series Index September |
Series Index August |
Percentage Point Change |
Direction |
Rate of Change |
Trend* (Months) |
| PMI | 43.5 | 49.9 | -6.4 | Contracting | Faster | 2 |
| New Orders | 38.8 | 48.3 | -9.5 | Contracting | Faster | 10 |
| Production | 40.8 | 52.1 | -11.3 | Contracting | From Growing | 1 |
| Employment | 41.8 | 49.7 | -7.9 | Contracting | Faster | 2 |
| Supplier Deliveries | 52.5 | 50.3 | +2.2 | Slowing | Faster | 15 |
| Inventories | 43.4 | 49.3 | -5.9 | Contracting | Faster | 3 |
| Customers' Inventories | 53.5 | 54.5 | -1.0 | Too High | Slower | 2 |
| Prices | 53.5 | 77.0 | -23.5 | Increasing | Slower | 21 |
| Backlog of Orders | 35.0 | 43.5 | -8.5 | Contracting | Faster | 5 |
| Exports | 52.0 | 57.0 | -5.0 | Growing | Slower | 70 |
| Imports | 44.0 | 48.5 | -4.5 | Contracting | Faster | 8 |
| OVERALL ECONOMY | Growing | Slower | 83 | |||
| Manufacturing Sector | Contracting | Faster | 2 | |||
*Number of months moving in current direction
Adhesives; Caustic Soda (7); Cold Finished Steel Products; Copper Products*; Corrugated Containers (5); Electrical Products; Natural Gas*; Paper Products; Plastics (4); Plastic Resins (2); and Steel* (9).
Aluminum Products; Copper (2); Copper Products*; Corn (2); Diesel Fuel* (2); Fuel Oil (2); Gasoline; Machined Parts; Natural Gas* (2); Stainless Steel Products; Steel*; Steel Products; Wheat; and Zinc.
Caustic Soda (7) is the only commodity reported in short supply.
Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.
Manufacturing contracted in September as the PMI registered 43.5 percent, 6.4 percentage points lower than the 49.9 percent reported in August. This is the lowest reading since October 2001 when the PMI registered 40.8 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI in excess of 41.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates the overall economy is growing and the manufacturing sector is contracting.
Ore stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through September (48.8 percent) corresponds to a 2.4 percent increase in real gross domestic product (GDP). In addition, if the PMI for September (43.5 percent) is annualized, it corresponds to a 0.8 percent increase in real GDP annually."
| Month | PMI | Month | PMI | |
|---|---|---|---|---|
| Sep 2008 | 43.5 | Mar 2008 | 48.6 | |
| Aug 2008 | 49.9 | Feb 2008 | 48.3 | |
| Jul 2008 | 50.0 | Jan 2008 | 50.7 | |
| Jun 2008 | 50.2 | Dec 2007 | 48.4 | |
| May 2008 | 49.6 | Nov 2007 | 50.0 | |
| Apr 2008 | 48.6 | Oct 2007 | 50.4 | |
| Average for 12 months — 49.0 High — 50.7 Low — 43.5 | ||||
ISM's New Orders Index registered 38.8 percent in September, 9.5 percentage points lower than the 48.3 percent registered in August. A New Orders Index above 51.6 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).
Four industries reported increases during September: Paper Products; Petroleum & Coal Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The industries failing to grow in September are: Textile Mills; Furniture & Related Products; Primary Metals; Non-metallic Mineral Products; Wood Products; Machinery; Apparel, Leather & Allied Products; Fabricated Metal Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Chemical Products.
| New Orders |
% Better |
% Same |
% Worse |
Net |
Index |
|---|---|---|---|---|---|
| Sep 2008 | 18 | 43 | 39 | -21 | 38.8 |
| Aug 2008 | 23 | 48 | 29 | -6 | 48.3 |
| Jul 2008 | 18 | 54 | 28 | -10 | 45.0 |
| Jun 2008 | 29 | 46 | 25 | +4 | 49.6 |
ISM's Production Index decreased to 40.8 percent in September, a decrease of 11.3 percentage points from the 52.1 percent reported in August. An index above 49.9 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.
Of the industries reporting in September, five registered growth: Petroleum & Coal Products; Food, Beverage & Tobacco Products; Paper Products; Chemical Products; and Miscellaneous Manufacturing. The industries failing to grow in September are: Textile Mills; Non-metallic Mineral Products; Wood Products; Primary Metals; Printing & Related Support Activities; Apparel, Leather & Allied Products; Machinery; Transportation Equipment; Furniture & Related Products; Plastics & Rubber Products; Fabricated Metal Products; and Electrical Equipment, Appliances & Components.
Production |
% Better |
% Same |
% Worse |
Net |
Index |
|---|---|---|---|---|---|
| Sep 2008 | 20 | 47 | 33 | -13 | 40.8 |
| Aug 2008 | 21 | 61 | 18 | +3 | 52.1 |
| Jul 2008 | 21 | 62 | 17 | +4 | 52.9 |
| Jun 2008 | 25 | 54 | 21 | +4 | 51.5 |
ISM's Employment Index registered 41.8 percent in September, which is a decrease of 7.9 percentage points when compared to the 49.7 percent reported in August. An Employment Index above 49.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
The three industries reporting growth in employment during September are: Petroleum & Coal Products; Chemical Products; and Computer & Electronic Products. The industries that reported decreases in employment during September are: Non-metallic Mineral Products; Transportation Equipment; Wood Products; Machinery; Fabricated Metal Products; Furniture & Related Products; Plastics & Rubber Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products.
Employment |
% Higher |
% Same |
% Lower |
Net |
Index |
|---|---|---|---|---|---|
| Sep 2008 | 8 | 65 | 27 | -19 | 41.8 |
| Aug 2008 | 17 | 63 | 20 | -3 | 49.7 |
| Jul 2008 | 19 | 65 | 16 | +3 | 51.9 |
| Jun 2008 | 11 | 69 | 20 | -9 | 43.7 |
The delivery performance of suppliers to manufacturing organizations continued to slow, and at a faster rate in September, as the Supplier Deliveries Index registered 52.5 percent, which is 2.2 percentage points higher than the 50.3 percent registered in August. A reading above 50 percent indicates slower deliveries.
The eight industries reporting slower supplier deliveries in September are: Plastics & Rubber Products; Paper Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Chemical Products; Miscellaneous Manufacturing; Computer & Electronic Products; and Food, Beverage & Tobacco Products. The industries reporting faster deliveries in September are: Transportation Equipment; Fabricated Metal Products; and Machinery.
| Supplier Deliveries |
% Slower |
% Same |
% Faster |
Net |
Index |
|---|---|---|---|---|---|
| Sep 2008 | 11 | 84 | 5 | +6 | 52.5 |
| Aug 2008 | 9 | 84 | 7 | +2 | 50.3 |
| Jul 2008 | 15 | 82 | 3 | +12 | 55.1 |
| Jun 2008 | 16 | 79 | 5 | +11 | 55.1 |
Manufacturers' inventories contracted in September as the Inventories Index registered 43.4 percent, which is 5.9 percentage points lower than the 49.3 percent reported in August. An Inventories Index greater than 42.4 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
The two industries reporting higher inventories in September are: Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components. The industries that reported decreases in September are: Furniture & Related Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Non-metallic Mineral Products; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Transportation Equipment; Machinery; and Miscellaneous Manufacturing.
Inventories |
% Higher |
% Same |
% Lower |
Net |
Index |
|---|---|---|---|---|---|
| Sep 2008 | 13 | 60 | 27 | -14 | 43.4 |
| Aug 2008 | 18 | 65 | 17 | +1 | 49.3 |
| Jul 2008 | 12 | 64 | 24 | -12 | 45.0 |
| Jun 2008 | 21 | 58 | 21 | 0 | 51.2 |
The ISM Customers' Inventories Index registered 53.5 percent in September, a decrease of 1 percentage point when compared to August's reading of 54.5 percent. The index indicates that respondents believe their customers' inventories are too high at this time.
Seven industries reported higher customers' inventories during September: Textile Mills; Electrical Equipment, Appliances & Components; Furniture & Related Products; Primary Metals; Machinery; Chemical Products; and Fabricated Metal Products. The industries that reported lower customers' inventories during September are: Plastics & Rubber Products; Transportation Equipment; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Non-metallic Mineral Products.
| Customers' Inventories |
% Reporting |
%Too High |
%About Right |
%Too Low |
Net |
Index |
|---|---|---|---|---|---|---|
| Sep 2008 | 77 | 23 | 61 | 16 | +7 | 53.5 |
| Aug 2008 | 66 | 22 | 65 | 13 | +9 | 54.5 |
| Jul 2008 | 74 | 17 | 60 | 23 | -6 | 47.0 |
| Jun 2008 | 72 | 25 | 60 | 15 | +10 | 55.0 |
The ISM Prices Index registered 53.5 percent in September compared to 77 percent in August, indicating manufacturers are paying higher prices on average when compared to August, but that prices are increasing at a much slower rate. While 30 percent of respondents reported paying higher prices and 23 percent reported paying lower prices, 47 percent of supply executives reported paying the same prices as the preceding month. A Prices Index above 47.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.
In September, 11 industries reported paying higher prices: Apparel, Leather & Allied Products; Plastics & Rubber Products; Textile Mills; Printing & Related Support Activities; Wood Products; Non-metallic Mineral Products; Paper Products; Furniture & Related Products; Transportation Equipment; Chemical Products; and Computer & Electronic Products. The industries that reported paying lower prices during September are: Primary Metals; Machinery; Fabricated Metal Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products.
Prices |
% Higher |
% Same |
% Lower |
Net |
Index |
|---|---|---|---|---|---|
| Sep 2008 | 30 | 47 | 23 | +7 | 53.5 |
| Aug 2008 | 60 | 34 | 6 | +54 | 77.0 |
| Jul 2008 | 80 | 17 | 3 | +77 | 88.5 |
| Jun 2008 | 84 | 15 | 1 | +83 | 91.5 |
ISM's Backlog of Orders Index registered 35 percent in September, 8.5 percentage points lower than the 43.5 percent reported in August. Of the 83 percent of respondents who reported their backlog of orders, 10 percent reported greater backlogs, 40 percent reported smaller backlogs, and 50 percent reported no change from August.
The three industries reporting an increase in order backlogs in September are: Plastics & Rubber Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The industries that reported decreases in order backlogs during September are: Furniture & Related Products; Machinery; Primary Metals; Non-metallic Mineral Products; Wood Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Computer & Electronic Products; and Chemical Products.
| Backlog of Orders |
% Reporting |
% Greater |
% Same |
% Less |
Net |
Index |
|---|---|---|---|---|---|---|
| Sep 2008 | 83 | 10 | 50 | 40 | -30 | 35.0 |
| Aug 2008 | 87 | 15 | 57 | 28 | -13 | 43.5 |
| Jul 2008 | 85 | 15 | 56 | 29 | -14 | 43.0 |
| Jun 2008 | 86 | 19 | 57 | 24 | -5 | 47.5 |
ISM's New Export Orders Index registered 52 percent in September, a decrease of 5 percentage points when compared to August's index of 57 percent. This is the 70th consecutive month of growth in the New Export Orders Index.
The six industries reporting growth in new export orders in September are: Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Fabricated Metal Products; and Transportation Equipment. The industries that reported decreases in new export orders in September are: Furniture & Related Products; Primary Metals; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; and Machinery.
| New Export Orders |
% Reporting |
% Higher |
% Same |
% Lower |
Net |
Index |
|---|---|---|---|---|---|---|
| Sep 2008 | 77 | 16 | 72 | 12 | +4 | 52.0 |
| Aug 2008 | 79 | 23 | 68 | 9 | +14 | 57.0 |
| Jul 2008 | 75 | 17 | 74 | 9 | +8 | 54.0 |
| Jun 2008 | 79 | 22 | 73 | 5 | +17 | 58.5 |
Imports of materials by manufacturers contracted during September as the Imports Index registered 44 percent, 4.5 percentage points lower than the 48.5 percent reported in August. This is the eighth consecutive month of contraction in imports.
The three industries reporting growth in import activity for September are: Transportation Equipment; Computer & Electronic Products; and Electrical Equipment, Appliances & Components. The industries that reported decreases in imports during September are: Furniture & Related Products; Plastics & Rubber Products; Wood Products; Paper Products; Machinery; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Chemical Products.
Imports |
% Reporting |
% Higher |
% Same |
% Lower |
Net |
Index |
|---|---|---|---|---|---|---|
| Sep 2008 | 81 | 5 | 78 | 17 | -12 | 44.0 |
| Aug 2008 | 82 | 9 | 79 | 12 | -3 | 48.5 |
| Jul 2008 | 80 | 8 | 77 | 15 | -7 | 46.5 |
| Jun 2008 | 82 | 9 | 74 | 17 | -8 | 46.0 |
* The Backlog of Orders, Prices, Customers' Inventories, Imports and New Export Orders Indexes do not meet the accepted criteria for seasonal adjustments.
Average commitment lead time for Capital Expenditures decreased four days to 113 days. Average lead time for Production Materials decreased four days to 51 days. Average lead time for maintenance, repair and operating (MRO) Supplies remained unchanged at 22 days.
| Percent Reporting | |||||||
|---|---|---|---|---|---|---|---|
Capital Expenditures |
Hand- to- Mouth |
30 Days |
60 Days |
90 Days |
6 Months |
1 Year+ |
Average Days |
| Sep 2008 | 28 | 5 | 14 | 15 | 27 | 11 | 113 |
| Aug 2008 | 25 | 6 | 16 | 16 | 24 | 13 | 117 |
| Jul 2008 | 27 | 6 | 9 | 19 | 27 | 12 | 117 |
| Jun 2008 | 23 | 7 | 11 | 20 | 25 | 14 | 123 |
Production Materials |
Hand- to- Mouth |
30 Days |
60 Days |
90 Days |
6 Months |
1 Year+ |
Average Days |
| Sep 2008 | 26 | 39 | 18 | 10 | 4 | 3 | 51 |
| Aug 2008 | 23 | 35 | 27 | 6 | 6 | 3 | 55 |
| Jul 2008 | 21 | 42 | 25 | 6 | 4 | 2 | 48 |
| Jun 2008 | 18 | 41 | 24 | 9 | 6 | 2 | 54 |
MRO Supplies |
Hand- to- Mouth |
30 Days |
60 Days |
90 Days |
6 Months |
1 Year+ |
Average Days |
| Sep 2008 | 53 | 37 | 7 | 2 | 1 | 0 | 22 |
| Aug 2008 | 53 | 34 | 9 | 4 | 0 | 0 | 22 |
| Jul 2008 | 56 | 32 | 10 | 2 | 0 | 0 | 20 |
| Jun 2008 | 50 | 38 | 8 | 3 | 0 | 1 | 25 |
The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM makes no representation, other than that stated within this release, regarding the individual company data collection procedures. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making.
The Manufacturing ISM Report On Business is based on data compiled from purchasing and supply executives nationwide. Membership of the Manufacturing Business Survey Committee is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Non-metallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies).
Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers' Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).
The resulting single index number for those meeting the criteria for seasonal adjustments (PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. The PMI is a composite index based on the seasonally adjusted diffusion indexes for five of the indicators with equal weights: New Orders, Production, Employment, Supplier Deliveries and Inventories.
Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI in excess of 41.1 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 41.1 percent, it is generally declining. The distance from 50 percent or 41.1 percent is indicative of the strength of the expansion or decline. With some of the indicators within this report, ISM has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis.
Responses to Buying Policy reflect the percent reporting the current month's lead time, the approximate weighted number of days ahead for which commitments are made for Production Materials; Capital Expenditures; and maintenance, repair and operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern.
The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management. ISM, established in 1915, is the largest supply management organization in the world as well as one of the most respected. Its mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education. This report has been issued by the association since 1931, except for a four-year interruption during World War II.
The next Manufacturing ISM Report On Business, featuring the October 2008 data, will be released on Monday, November 3.