The US manufacturing sector continued to struggle in September, with activity contracting for the sixth straight month.
Employment component in ISM Manufacturing PMI slipped further into contraction in September … so far, deterioration has been consistent with sideways move in manufacturing payrolls (orange) over past year pic.twitter.com/5Xn4YxfPyQ
— Liz Ann Sonders (@LizAnnSonders) October 2, 2024
The Institute for Supply Management’s manufacturing index remained unchanged at 47.2, falling short of the expected 47.5 and extending the ongoing period of weakness. A reading below 50 indicates contraction.
New orders and production remained in contraction territory, while the prices index fell into contraction at 48.3%. Employment also decreased, with the employment index dropping to 43.9%.
Sharp move lower for prices paid (blue) component in ISM Manufacturing PMI in September … supplier deliveries moved up a bit, but not signaling any kind of supply chain stress right now pic.twitter.com/Tp28ibNHse
— Liz Ann Sonders (@LizAnnSonders) October 2, 2024
Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted that demand continues to be weak and output declined.
He stated, “Employment shrunk at a faster rate while production approached expansion.”
#GlobalNews | Latest news from US on ISM manufacturing price index and job openings 👇#UnitedStatesofAmerica #USA pic.twitter.com/FJ5uxlc7yw
— ET NOW (@ETNOWlive) October 1, 2024
.@MarketWatch on @ISM #Manufacturing PMI®: “Uncertainty over the regulatory, fiscal and trade policy is holding down activity, and this will persist into 2025, said Richard Moody, chief economist at Regions Financial Corporation.” https://t.co/YwvcVq0UKc #ISMPMI #economy
— Institute for Supply Management (@ism) October 1, 2024
The data showed that 77% of manufacturing GDP contracted in September, up from 65% in August, highlighting a worsening trend. Fiore pointed out that only the Food, Beverage & Tobacco industry expanded among the largest sectors. Separately, the U.S. Department of Labor’s Job Openings and Labor Turnover Survey (JOLTs) for August revealed that job openings remained relatively steady at 8 million, a decrease of 1.3 million compared to a year ago.
Us manufacturing activity continues slump
Hires were consistent at 5.3 million, while quits decreased to 3.1 million. Prior to the data release, traders estimated a 60.5% chance of a quarter-point rate cut and a 39.5% chance of a half-point cut by the Federal Reserve.
Following the release, probabilities shifted slightly to 59.5% for a quarter-point cut and 40.5% for a half-point cut. The weak manufacturing data and mixed job market signals have raised questions about the Federal Reserve’s next move regarding interest rate cuts. The central bank faces the challenge of balancing the need to support the economy while managing inflation concerns.
The ongoing contraction in the manufacturing sector and the uncertainty surrounding the job market have contributed to market volatility. The S&P 500 index, as tracked by the SPDR S&P 500 ETF Trust, was down 1.22% as of 10:15 a.m. ET on Tuesday. Meanwhile, the dollar rose, with the Invesco DB USD Index Bullish Fund ETF ticking upwards.
As the US economy navigates through this challenging period, investors and policymakers will closely monitor upcoming economic data and the Federal Reserve’s actions to gauge the health of the manufacturing sector and the broader economy.
