KPI — October 2023: State of Manufacturing
Economic activity in the manufacturing sector contracted in September for the 11th consecutive month following a 28-month period of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®. The Manufacturing PMI® registered 49%, 1.4 percentage points higher than 47.6% recorded a month prior but still in contraction territory.
“The U.S. manufacturing sector continued its contraction trend but at a slower rate, recording its best performance since November 2022, when the PMI® also registered 49%. Companies are still managing outputs appropriately as order softness continues, but the month-over-month PMI® improvement in September is a clear positive,” says Timothy R. Fiore, CPSM, C.P.M., chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.
Important takeaways, Courtesy of the Manufacturing ISM® Report On Business®:
- Demand eased marginally, with the (1) New Orders Index contracting, though at a slower rate; (2) New Export Orders Index continuing in contraction territory but with a marginal increase; and (3) Backlog of Orders Index declining.
- The Customers’ Inventories Index reading indicated enhanced supply chain efficiency, as output improved and customers’ inventories continued to decline.
- Output/Consumption (measured by the Production and Employment indexes) was positive, with a combined 5.2-percentage point upward impact on the Manufacturing PMI® Panelists’ companies improved production compared to August and continued to manage head counts, primarily through attrition and hiring freezes.
- Inputs – defined as supplier deliveries, inventories, prices and imports – continued to accommodate future demand growth.
- The Supplier Deliveries Index indicated faster deliveries for the 12th straight month (at a faster rate compared to August), while the Inventories Index remained in contraction territory but improved month- over-month.
- The Prices Index remained in decreasing territory, 4.6 percentage points lower than the August reading, signifying a return to price reductions, but energy costs in August and September could possibly affect future material costs. Manufacturing supplier lead times continue to decrease, but at a slow pace.
