ISM September survey captures deepening manufacturing gloom

A PMI reading above 50% indicates growth in the manufacturing economy, while a reading below that suggests contraction.

ISM stated that, prior to January and February’s respective readings of 50.9% and 50.3%, US manufacturing had been in contraction for over two years (specifically, 26 months).

Production growth was the biggest factor in the September rise in the PMI. However, declines in new orders and inventories exceeded the production increase, “rendering the Manufacturing PMI improvement negligible,” according to Susan Spence, chair of the ISM Manufacturing Business Survey Committee.

Spence noted that only one of four demand indicators improved in September, with order backlogs rising 1.5 points. At the same time, new orders, new export orders, and customers’ inventory indices contracted at a faster clip.

The five manufacturing industries reporting growth in September were petroleum and coal products, primary metals, fabricated metal products, textile mills, and miscellaneous manufacturing.

‘Tariffs’ is not the favorite word of supply management professionals

Respondents’ comments in the September ISM report are particularly jarring.

“Business continues to be severely depressed,” a transportation equipment executive stated. “Profits are down and extreme taxes (tariffs) are being shouldered by all companies in our space.”

The derivative steel and aluminum tariffs, to them, have been “devastating.”

They believe “we are in a stagflation period where prices are up but orders are down due to tariff policy, and again, customers are not willing to pay the higher prices, so they are just not buying.”

A machinery executive agreed on the pull-back in customer purchases: “Ongoing macroeconomic conditions highlighted by interest-rate management and tariffs continue to impact customer purchasing decisions, resulting in subdued production rates and growing cost concerns on direct material and operations.”

A professional in fabricated metal products commented that tariffs are increasing prices for maintenance, repair, and operating (MRO) products, as well as hardware, AI, and stainless steel. Additionally, “the slowdown in agriculture has had stark impacts on bottom lines for raw materials,” they said.

An executive in the miscellaneous manufacturing category put it bluntly: “Steel tariffs are killing us.”