Factory activity in the world’s largest economy remained robust in September, top-tier data out Friday suggested.
There’s no shortage of hand-wringing over “peak growth.” And the balance of evidence does perhaps point to an imminent loss of momentum. But so far anyway, those calling for a sharp deceleration have been found wanting.
The headline print on ISM manufacturing for September beat expectations at 61.1 (figure below). Consensus was looking for 59.5. Production slipped, but the new orders gauge was steady at an extremely elevated level. Notably, the employment index moved back into expansion territory.
The final read on IHS Markit’s gauge for last month was 60.7, up slightly from the flash print. That’s the lowest since April, but “lowest” is a relative term.
Needless to say, supply chain issues persisted last month. “Panelists reported that their companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand,” ISM Chair Timothy Fiore said, in a press release.
“All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting products,” he added, flagging the usual long list of pandemic dynamics including “worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions and overseas supply chain problems,” all of which are serving to “limit manufacturing growth potential.”
Still, ISM panelists are optimistic. There were a trio of positive growth comments for every tepid assessment.
I have serious reservations about the following chart (below) which is often circulated among analysts and market participants — hence the snark in the subheading.
Suffice to say I’m not convinced the two series are comparable, but take it for whatever it’s not worth.
Chris Williamson, Chief Business Economist at IHS Markit, is a broken record. That’s not criticism, by the way. There are only so many ways you can say the same thing every month when the conditions never change.
“The US manufacturing sector continues to run hot, with demand once again racing well ahead of production capacity as firms report widespread issues with supply chains and the availability of labor,” Williamson said Friday, adding that “the inability to meet demand amid near-record shortages of inputs and labor not only led to an unprecedented rise in backlogs of work as orders sat unfulfilled, but prices charged for those goods leaving the factory gate also surged higher again in September, rising at a rate exceeding anything seen in nearly 15 years of survey history.”
And that, as they say, is that.
