TEMPE, AZ – Economic activity in the manufacturing sector expanded in September for the 14th consecutive month, says the Institute for Supply Management. However, the PMI fell 1.9 percentage points to 54.4%.

A reading above 50% indicates the manufacturing economy is generally expanding. However, the ISM went so far to point out that despite the positive PMI, many of the trend lines appear weaker. The PMI has fallen 11.5 percentage points from its January peak of 65.9%.

New orders dropped 2 points to 51.1%, while production fell 3.4 points to 56.5%. Inventories grew to 55.6%, up 4.2 percentage points. Customer inventories dropped 1 point to 42.5%. Backlogs fell 5 points to 46.5%.

The overall economy grew for the 17th consecutive month, says ISM.

“While the headline number shows relative strength this month, as the PMI reading of 54.4% is still quite positive, the overall picture is less encouraging,” said ISM spokesman Norbert J. Ore. “The growth of new orders continued to slow, as the index is down significantly from its cyclical high. Production is currently growing at a faster rate than new orders, but it typically lags and would be expected to weaken further in the fourth quarter. Manufacturing has enjoyed a stronger recovery than other sectors of the economy, but it appears that weaker growth is the expectation for the fourth quarter. Both the inventories and backlog of orders indexes are sending strong negative signals of weakening performance in the sector.”

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