By Kasra Kangarloo

WASHINGTON (MNI) – The U.S. manufacturing sector is expected to
continue improving at a sluggish pace in September, with Friday’s report
by the Institute for Supply Managers forecast to show a decline in
activity.

According to a survey of economists by Market News International,
the median estimate is for the headline index to fall from 56.3 to 54.0.
This would still indicate an overall expansion in activity, although at
a slower pace. An index above 50 indicates expanding activity; an index
below 50 indicates contraction.

The consensus based on the five regional reports on manufacturing
activity already released for September suggest a lower reading for
headline ISM.

Reports conducted by the Federal Reserve Banks of Dallas, Richmond,
and New York have shown sharp declines in regional manufacturing.
Philadelphia showed improvement, but its index of -0.7 indicates
continued contraction in the sector.

Paul Dales, economist at Capital Economics, cited regional surveys
as the basis for his estimate of 54.5. “The data would be consistent
with positive, but much slower output,” he said in a telephone
interview.

Thursday’s release of the Chicago Purchasing Managers’ Index was
the only bright spot for the month, with the overall index jumping
unexpectedly to 60.4 from 56.7. The Chicago report, also known as
Chicago Business Barometer, is considered a prominent indicator due to
its inclusion of the automobile industry.

Based on ISM data, the manufacturing sector has remained
expansionary since the July 2009, the last month the index posted below
the key threshold of 50.

Overall, the sector’s improvement has been slow, as heavy job
losses associated with the recession are yet to be recovered. This year
has only seen an addition of approximately 140,000 manufacturing jobs.
The August employment report, however, showed the first decline in the
sector’s employment since December.

— Kasra Kangarloo is a reporter for Need to Know News in Washington

** Market News International Washington Bureau: 202-371-2121 **

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