The IHS Markit US Manufacturing PMI was revised slightly higher to 51.1 in September 2019 from a preliminary 51.0 and compared to the previous month's ten-year low of 50.3. The latest reading was the highest since April, but still signaled a modest overall improvement in manufacturing sector business conditions.
Driving the headline PMI figure higher was a quicker rise in production in September. The modest upturn was the fastest since April following reports of slightly stronger client demand and efforts to clear backlogs. Nonetheless, the rate of expansion was below the series trend.
10/1/2019 1:50:41 PM
The upturn in new business accelerated from August's recent low. New order growth was attributed to an increase in domestic client demand and efforts to price competitively. That said, the upturn was only moderate as a fall in foreign client demand weighed on total sales. The decline in export sales was the second-fastest for nearly five years. Ongoing trade wars also reportedly exacerbated difficult external demand conditions.
Subsequently, firms increased employment marginally in response to greater production requirements. The rise in staffing levels also came alongside a faster fall in backlogs of work.
Although tentative towards their output expectations for the coming 12 months, firms expressed a greater degree of confidence in September. The level of optimism reached a three-month high but remained relatively subdued overall.
Meanwhile, cost burdens increased moderately. The faster pace of inflation was linked to the impact of tariffs, although a drop in demand for inputs kept cost rises relatively muted. Similarly, output charges rose modestly, as firms sought to pass on higher costs, whilst maintaining efforts to be competitive.
In line with subdued demand conditions, input buying fell for a third month running. Firms also stated that weak demand had led to greater efforts to run down stocks. Despite a decline in purchasing, supplier performance deteriorated further as firms increasingly reported a change to domestic suppliers, due to tariffs, with vendors struggling to deliver goods to manufacturers amid capacity issues.