Markets

US manufacturing sector activity hits 5-month high in September, IHS Markit says

Key Points
  • The initial reading of U.S. manufacturing PMI reached 51.0 in September, the highest figure since April.
  • Stronger new order growth and rates of output largely helped boost the overall sector this month, according to Markit.
  • "Although picking up slightly, the overall rate of growth in September remained among the weakest since 2016," says Markit's Chris Williamson.
U.S. factory worker
Thomas Barwick | Stone | Getty Images

The U.S. manufacturing sector recovered in September with activity growth hitting a five-month high, according to IHS Markit.

The initial reading of U.S. manufacturing Purchasing Managers' Index for September reached 51.0, the highest figure since April and up from 50.3 in August. Readings above 50 show an expansion.

Conditions can change between now and the final reading from Markit for September, which will be out Oct. 1.

Stronger new order growth and rates of output largely helped boost the overall sector this month, according to Markit. However, export order books continue to weaken, with the new work from abroad dropping for the fourth time in five months, Markit said.

"Although picking up slightly, the overall rate of growth in September remained among the weakest since 2016," Chris Williamson, chief business economist at Markit, said in a statement. "Prospects also look gloomy, with inflows of new business down to the lowest since 2009 and firms' expectations of growth over the coming year stuck at one of the most subdued levels since 2012."

A gauge from the Institute for Supply Management showed the sector contracted in August, its first decline since 2016. The August contraction ended a 35-month expansion period, according to ISM.

The escalated trade war between the U.S. and China has taken a big bite from the manufacturing sector, which once was considered one of the biggest winners under the Trump administration, scoring big growth in employment and activity.

"Key to the recent deterioration has been a further spill-over of the trade-led slowdown in manufacturing to the service sector," Williamson said. "A ray of light comes from manufacturing reporting some easing of headwinds, though factory conditions likewise remained among the toughest since 2009 to underscore the broad-based nature of the current lassitude."