Is Manufacturing a Drag on Economic Growth?



Manufacturing growth continued to decelerate in September, according to the flash reading of Markit’s U.S. Manufacturing Purchasing Managers’ Index. The PMI decreased for the second consecutive month, from 53.1 in August to 52.8 in September, its slowest rate since April. The component indexes for Output and New Orders both shrank, still indicating expansion but at a slower rate than before. The index for Employment fell from 53.1 to 51.4, its slowest growth rate in three months.

With monetary stimulus and the issue of price stability front and center in the economic conversation right now, it’s interesting to note that output price growth accelerated in September while input price growth decelerated. That said, the index for input prices fell just 0.4 points to 55.8, the highest reading for any component, and the index for output prices climbed 0.3 points to 51.4. This indicates that in input prices are still climbing faster than output prices, but the gap between the growth rates narrowed slightly.

“The flash PMI indicates that manufacturers enjoyed a further improvement in business conditions in September, suggesting the third quarter has on the whole seen stronger growth than the lacklustre performance seen in the second quarter,” Markit chief economist Chris Williamson said in the report.