The US manufacturing sector continued its downward trend in September, contracting for the sixth consecutive month. The latest data paints a picture of a sector struggling with weak demand, slowing production, and declining prices.
The Institute for Supply Management (ISM) Manufacturing PMI remained at 47.2% for September, indicating contraction. This figure reflects continued challenges for manufacturers, with the PMI staying below the 50% threshold for the 22nd time in the last 23 months. While production showed a slight improvement, it remained below the expansionary level. New orders continued to decline, signifying weak demand.
The ISM data also highlighted a decline in prices and employment. The Prices Index fell into contractionary territory, indicating that manufacturers are seeing reduced pressure on input costs. However, this was accompanied by a faster decline in employment, suggesting that businesses are adjusting to the slowdown by reducing their workforce.
Meanwhile, the US Department of Labor released the Job Openings and Labor Turnover Survey (JOLTs) for August. The report revealed that job openings remained relatively stable at 8 million, indicating a consistent level of available positions. However, this figure was down 1.3 million compared to August 2022.
Hiring activity also remained steady in August, with the number of hires holding at 5.3 million. This suggests that while job openings have declined, employers are still actively recruiting.
The number of quits continued its downward trend in August, reflecting a slight reduction in voluntary job separations. Layoffs and discharges, however, remained largely unchanged, suggesting limited involuntary job losses.
The latest economic data adds to the picture of a US economy grappling with inflation and slowing growth. The Federal Reserve has been closely watching these indicators and is expected to make decisions about interest rate policy in the coming weeks. Markets are now awaiting key employment data releases later this week, including the ADP employment change for August on Wednesday and Friday’s non-farm payroll, unemployment, and wage growth reports. These releases will provide further insights into the health of the labor market and provide clues about the Fed’s next moves.
