Manufacturing activity expanded at a slower pace in August

The manufacturing sector continued its expansion in September but at a slower pace on drops in new orders and hiring.

The Institute for Supply Management’s (ISM) index fell to 56.6 last month, which was weaker than anticipated, from 59  in August, the report showed on Wednesday.

{mosads}“Overall, manufacturing sentiment was a bit softer than expected in September, but the underlying data show strong expansions in both demand and output,” said Chad Moutray, chief economist for the National Association of Manufacturers.

August’s reading had been the best showing since March 2011.

Readings above 50 signals an expanding manufacturing sector.

September’s growth slowed for new orders, which fell to 60 from 66.7 while hiring slipped to 54.6 from 58.1.

Also, exports fell to 53.5 from 55, possibly weakened by a series of international crises.

“While it is disappointing that the employment index declined somewhat in September, the longer term trend line reflects improvements from earlier in the year,” Moutray said. 

The measure of hiring averaged 57 in the third quarter, up from the 51.9 and 53.4 averages in the first and second quarters, respectively, Moutray said.

“Manufacturing leaders are mostly positive about the coming months,” he said.

“Yet, business leaders are also keenly aware of possible risks on the horizon.”

He said those concerns include geopolitical events, slowing economic growth in key export markets, a still-cautious consumer and workforce challenges.

Meanwhile, despite some slips in the data, the pace of production improved slightly to 64.6 from 64.5, an indication of strong growth.