US manufacturing activity expanded for a ninth straight month in September, according to the Institute for Supply Management's survey released Thursday, October 1. The headline Manufacturing PMI was 54.5, down slightly from 54.6 in August. Readings above 50 indicate that more surveyed manufacturers reported improving conditions than worsening ones; the index is not a measure of the percentage growth in factory output.
The report had mixed signals beneath the headline. New orders rose to 55.3 from 53.7, and the employment index increased to 52.7 from 51.2. But the prices index jumped to 77.9 from 71.1, its highest level since March, with ISM respondents reporting broad increases in raw-material prices. That index reflects the share of businesses reporting rising prices, not the rate of inflation across the economy.
The survey suggests demand and factory hiring remained in expansion territory, alongside higher input-cost pressure. It does not establish whether those costs will be passed through to consumers or how they will affect official inflation data.
Reader question: Does a PMI of 54.5 mean factory output grew 4.5%? No. It is a diffusion index showing the balance of businesses reporting expansion, not a percentage change in production.