The Institute of Supply Management’s closely watched manufacturing index defied downbeat expectations on Monday by growing one percentage point in September to its highest level since June, signaling expansion at U.S. factories.
The growth in the PMI to 51.6 percent included a 2.6 percentage point increase in the production index, to 51.2 percent, putting that measure in a growth range after production contracted in August.
The gain came despite a growing number of economic reports showing weakness in the American economy.
The ISM’s measure for backlog of orders also plunged 4.5 percentage points to 41.5 percent, the lowest point since April 2009 and the new orders index remained in decline for the third straight month, a sign buyers remain cautious in a fragile economic environment.
Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee, said manufacturers generally are showing “concern over the sluggish economic, political and policy uncertainty in Washington and forecasts of high unemployment that will continue to put pressure on demand for manufactured products.”
Despite the caution, inventories remain relatively high at 52 percent, down 0.3 points from the month before. That still puts the inventory index in solid expansion, however, and ISM said its index for customers’ inventories jumped 2.5 points to 49 percent, the highest point this year.
Exports helped drive the gain, with the export index advancing three percentage points to 53.5 percent.
