U.S. Factory Momentum Down During September

U.S. Factory Momentum Down During SeptemberActivity growth in the manufacturing sector slowed during September as product demand declined. Companies hired fewer workers, according to an industry report. This drop came after the numbers had increased during recent months.

During the month of August, the U.S. Manufacturing Purchasing Managers Index was at 53.1, but it fell to 52.8 during September. Any reading higher than 50 is an indicator of expansion. Output growth grew to a six-month high of 55.3, which is up from the previous month’s 52.5.

Reports indicate new order inflows coming from domestic, as well as overseas customers, did decrease, suggesting production may drop again during the fourth quarter. Firms were extremely cautious when hiring during the month, adding a very limited number of jobs. While the employment sub index stood at 53.1 during August, it fell to 51.4 during September. September had the slowest rate of job creation in three months and that is being blamed on a decrease in the number of orders.

Emphasizing some concerns about the health of the economy, the Federal Reserve announced last week it would continue buying $85 billion of bonds each month to keep interest rates low and to support economic growth and job creation. Investors originally expected the central bank to start tapering those purchases later in September so many had been cautious about spending and investments. However, during the September meeting of the Federal Reserve, board members decided the economy was too tepid and it is not time to begin tapering.

The U.S. economy grew more quickly than anticipated at a 2.5 percent pace during the second quarter, but the Federal Reserve cut  its growth forecasts last week not only for the remainder of this year but for next year, too.

A separate national manufacturing survey from the Institute for Supply Management (ISM) had interesting results. It showed the manufacturing sector grew during August at its fastest pace in more than two years.  It credited the growth on an increasing number of orders. The September survey from ISM will be released on October 1. Manufacturing has a significant impact on the overall status of the economy.

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About the author

Drew is a regular contributor covering trending topics.