US factories post slowest progress in nearly two and a half years

WashingtonOct 3 – U.S. manufacturing activity grew at its slowest pace in nearly two and a half years in September as new orders contracted, likely because higher interest rates to curb inflation dented demand for goods.

institute of supply managementISM) Monday said that his PMI Manufacturing fell to 50.9 points this month, the lowest reading since May 2020, from 52.8 points in August.

A reading above 50 points indicates expansion in the manufacturing sector, which accounts for 11.9% of the US economy. Economists polled by Reuters had expected the index to decline to 52.3 points.

Part of the slowdown in the manufacturing sector reflects a shift in spending from goods to services. Data from the US federal government on Friday showed that spending on long-life manufactured goods rose only slightly in August, while spending on services rose.

Since March, the Fed has raised its policy rate from near zero to the current range of 3.00% to 3.25%, indicating last month that more big hikes are on the way this year.

Higher borrowing costs reduce spending on high-value items such as appliances and furniture, which are often purchased on credit.

Sub-catalog of new orders for ISM It fell to 47.1 points last month, also the lowest reading since May 2020, from 51.3 in August. This is the third time this year that the index has contracted.

The order book is also shrinking. While this indicates a further slowdown in the industrial sector United States of Americais also a function of reducing bottlenecks in the supply chain.

Scale ISM It fell on supplier shipments to 52.4 points from 55.1 in August. A reading above 50% indicates a slowdown in deliveries to factories

With supply chains loosening, inflationary pressures and factory prices continued to fall.

The measure of prices paid by manufacturers fell to 51.7 points, the lowest reading since June 2020, from 52.5 points in August. The continued slowdown is due to lower commodity prices. Annual inflation for consumers and producers slowed in August, leading to expectations that prices may have peaked.

Measurement of employment in factories ISM It fell to 48.7 points from a five-month high of 54.2 points in August. This is the fourth time that the index has contracted this year. The indicator was a weak indicator of manufacturing jobs in the US federal government’s employment report. United States of Americawhich has grown steadily despite fluctuations in the employment index in ISM.

Although job growth has slowed, demand for workers remains strong. At the end of July, there were 11.2 million job vacancies in the entire economy, with two vacancies for every unemployed worker.