U.S. Manufacturing Activity Shrinks for Sixth Consecutive Month Price Paid Indicator Hits Lowest of the Year

On October 2, U.S. manufacturing activity contracted for the sixth consecutive month in September, reflecting weak orders and declining employment. Data released Tuesday showed that the U.S. Institute for Supply Management (ISM) manufacturing index was reported at 47.2. an index below 50 indicates a contraction of industry activity. Orders and output indicators fell at a slower pace than the previous month, but still in contractionary territory. The sixth consecutive month of declines in the orders indicator kept production in check and pushed down the ISM employment indicator.Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee, said, “Demand remains subdued, and firms are less willing to invest in capital and inventories due to uncertainty about monetary policy and the election. ”Thirteen industries in September showed contraction, with printing and plastics, rubber and wood products leading the decline. Five industries expanded. Lower prices for raw materials such as oil could help manufactured goods prices fall further and keep service inflation in check. This will keep Federal Reserve policymakers on track to continue cutting interest rates to prevent a deterioration in the labor market.