September Manufacturing Activity Declines

Date: September 26, 2016

Activity Lowest Since June; New Business Growth Also Lower

The latest manufacturing PMI data from Markit indicates that in September, US manufacturers have seen a decline in activity. Bloomberg News reported Markit’s September flash PMI “came in at 51.4,” down from 52 in the previous month. Bloomberg said manufacturing activity “fell more than expected in September amid the weakest improvement in business conditions since June.” However, the sector still expanded slightly, as any reading over 50 suggests some expansion in the sector. Business Insider says economists “had forecast” the index dropping slightly to 51.9. The report “also noted that new business growth continued to ease from June’s peak and that export orders dropped for the first time since May.” However, the report said that manufacturers “appear reasonably upbeat about their longer-term prospects,” according to Tim Moore, Senior Economist at IHS Markit. Moore said, “Reflecting this, job creation rebounded since August and input buying continued to expand at a notably faster pace than seen during the first half of the year. At the same time, overall cost inflation remained marginal and this provided some headroom to stimulate client spending through price discounting.”

What This Means For Small Businesses

The latest manufacturing data shows that, despite some signs of expansion following the recession, the overall picture for the manufacturing sector remains one of tepid growth, rather than robust expansion. Weakness in the manufacturing sector is causing less optimism among small businesses across sectors. As NFIB Chief Economist Bill Dunkelberg said in the latest Small Business Economic Trends report, “Capital spending will remain M.I.A., plans are at the highest level for the recovery, matching the previous peak in 2014, but not typical of an expansion and reports of actual spending have been weakening.”

Additional Reading

MarketWatch also reported the latest PMI manufacturing data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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