(Bloomberg) -- A measure of U.S. manufacturing cooled in September from a 14-year high as supply bottlenecks and price pressures eased, Institute for Supply Management data showed Monday.
Highlights of ISM Manufacturing (September) |
---|
|
Key Takeaways
The ISM report indicates manufacturing is coming off the boil while still expanding at a solid pace amid steady demand and lower taxes, indicating the industry is poised to contribute to economic growth in the second half. Tariff wars with China remain a cloud over the outlook -- with the ISM again citing respondents as “overwhelmingly concerned” about the levies -- though an updated trade accord with Canada and Mexico may provide some relief.
Declines in gauges of backlogs and supplier-delivery times signal factories are catching up with demand, helping to dissipate price pressures. In prior months, producers’ rush to buy materials ahead of U.S. tariffs and counter-levies by China triggered supply-chain disruptions and a surge in costs.
The ISM index of employment bodes well for manufacturing payrolls, which are projected to rebound in September after a small drop in August. The data will be part of the U.S. jobs report due on Friday from the Labor Department.
Fifteen of 18 industries reported growth, including machinery; chemical products; transportation equipment; furniture; textile mills; plastics and rubber products; and computer and electronics, ISM said in a statement. The only industry reporting a contraction was primary metals.
Official’s Views
Companies overall say the environment is good for business, though have expressed “less optimism” that they will be able to pass on higher materials prices to customers, Timothy Fiore, chairman of the ISM manufacturing survey, said on a conference call Monday.
While the new U.S.-Mexico-Canada agreement “provides clarity, and clarity is good for the business community,” Fiore added that there’s still uncertainty about tariffs on imported metals.