US manufacturing has worst month in 7 years

01 October 2008 16:40  [Source: ICIS news]

WASHINGTON (ICIS news)--The US manufacturing sector suffered its worst month in seven years in September, a top industry monitor said on Wednesday, with a key measure of production activity falling by 6.4 points from August.

 

The Institute for Supply Management (ISM) said that its closely watched purchasing managers index (PMI) for the nation’s manufacturing economy dropped to 43.5% in September, down from the 49.9% PMI recorded in August.

 

A PMI reading of 50% or higher indicates that manufacturing industries - key downstream consuming sectors for chemicals - are experiencing growth. A reading below 50% means that the broad manufacturing sector is in contraction.

 

“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 Norbert Ore, chairman of the institute’s business survey committee.

 

Since October last year, the PMI has more less held steady around the 50% midpoint, moving slightly above or just below that middle measure. The PMI readings in June and July were at 50.2% and 50% respectively, then fell marginally to 49.9% in August.

 

The sudden drop in September to 43.5% represents a nearly 13% decline from August’s level of activity and is the lowest PMI reading since October 2001.

 

The institute compiles its PMI measure by surveying top executives in 19 key manufacturing sectors on ten business performance measures, such as new orders, production, employment, inventories and prices.

 

ISM said that of the 19 manufacturing industries it surveyed in September, only six reported growth, including chemical products.

 

Plastics and rubber products were among the 13 manufacturing sectors reporting performance declines in September, the institute said.

 

The 12 other production sectors reporting declines include many that are major downstream consumers of chemicals, such as textiles, furniture, machinery, transportation equipment, electrical equipment and appliances.

 

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By: Joe Kamalick
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