US factory activity contracted for the seventh consecutive month in September, signalling ongoing challenges for the manufacturing sector. The latest data reflects a decrease in orders, adding to evidence that manufacturing activity is struggling to gain momentum. The Institute for Supply Management (ISM) reported that its manufacturing index edged up slightly by 0.4 points to 49.1 in September. However, a reading below 50 still indicates contraction. The index has remained within a narrow range throughout the year, suggesting persistent sluggishness.
The group’s orders index experienced a setback, sliding 2.5 points to 48.9. This decline pushed the index back into contraction territory after a brief expansion in August, which was the first since January. The contraction in new orders suggests weakening demand and potential concerns about future production levels. Factory employment also experienced a decrease in September, although the rate of decline was less pronounced than in previous months.
Despite some improvements in output, companies are still focused on managing headcounts. According to Susan Spence, chair of the ISM Manufacturing Business Survey Committee, approximately 64 per cent of panellists indicated that managing head count remains the norm at their companies, as opposed to hiring. This suggests that businesses are still cautious about increasing staffing levels amid the ongoing economic uncertainty. The continued contraction in manufacturing activity underscores the challenges facing the sector and highlights the need for policies to support growth and investment.
