September 2018 Manufacturing Survey Growth Trends Mixed

The ISM Manufacturing survey marginally declined but continued in expansion. The key internals are in expansion. The Markit PMI manufacturing Index is in positive territory but improved.

Analyst Opinion of the ISM Manufacturing Survey

Based on these surveys and the district Federal Reserve Surveys, one would expect the Fed’s Industrial Production index growth rate remain about the same as last month. Overall, surveys do not have a high correlation to the movement of industrial production (manufacturing) since the Great Recession. This month the ISM survey went down and the Markit survey up – go figure.

From Econoday:

From the Markit PMI Manufacturing Index:

Output and new order growth gains momentum in September

• PMI rises to four-month high
• Steeper increases in production and new business
• Backlogs expand at joint-fastest rate for three years
• September data indicated a strong improvement in operating conditions across the U.S. manufacturing sector. The overall performance was driven by sharper rises in output and new orders, though new business from abroad continued to expand at only a marginal pace. A faster increase in new orders contributed to greater capacity pressures, with backlogs accumulating at the joint-fastest rate since September 2015.
• Meanwhile, input prices continued to increase sharply. Components shortages and increased demand for inputs reportedly pushed purchase costs higher. Firms were able to partly pass greater costs onto clients through a solid rise in charges. The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 55.6 in September, up from 54.7 in August. The headline figure rose to a four-month high and was well above the series trend. Although the average for the third quarter was strong overall, it signalled the softest expansion since the fourth quarter of 2017.