U.S. manufacturing grew at the slowest pace in 10 months in September as inventories rose, signaling slower growth in production and freight shipments.
The Institute for Supply Management’s factory index dropped to 54.4 from 56.3 in August. Readings greater than 50 signal growth. Measures of orders and production fell to the lowest level since June 2009. New orders fell 2 percent to 51.1 while inventories jumped 4.2 percent to 55.6 and backlogs of orders shrank five points to 46.5.
While the ISM’s main index remains positive, “the overall picture is less encouraging,” said Norbert J. Ore, chair of the ISM manufacturing business survey committee.
He noted that growth in new orders continued to slow, with the index down significantly from its cyclical high of 65.9 in January. “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,” he said.
“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,” Ore said.
The report came as China’s official purchasing manager’s index showed Chinese manufacturing accelerated in September despite the government’s desire to slow the economy. The China purchasing manager’s index rose to 53.8, its highest level since May, from 51.7 in August, beating consensus expectations of 52.
China’s economic growth slowed to an annual rate of 10.3 percent in the second quarter, from 11.9 percent in the first quarter, according to official statistics. The government is targeting growth of 8 percent for the year as a whole.
-- Contact Joseph Bonney at firstname.lastname@example.org.