Growth in the manufacturing sector unexpectedly slowed in September, adding to weakness in the economy as the coronavirus pandemic rages on in the U.S.
The monthly PMI Manufacturing index from the Institute for Supply Management (ISM), a widely watched gauge of the nation’s manufacturing health, slid to 55.4 percent from 56 percent in August. Economists had forecast a 56.3 percent reading.
Figures above 50 percent indicate growth, and the sector has been in positive territory for five months since COVID-19 first took hold in the U.S. But September’s retreat exposed potential weaknesses for factories as they try to navigate a slowing recovery.
New orders dropped 7.4 points to 60.2 percent, production fell 2.3 points to 61 percent, and employment remained in contraction territory, at 49.6 percent. Factory employment has been contracting since July 2019, posing a challenge to President TrumpDonald John TrumpTrump signs bill averting shutdown after brief funding lapse Privacy, civil rights groups demand transparency from Amazon on election data breaches Facebook takes down Trump campaign ads tying refugees to coronavirus MORE and his reelection bid after promising to revive American manufacturing.
“While certain industry sectors are experiencing difficulties that will continue in the near term, the manufacturing community as a whole has learned to conduct business effectively and deal with the variables imposed by the COVID-19 pandemic,” said Institute for Supply Management Chair Timothy R. Fiore in a statement Thursday.
While manufacturing only accounts for about 10 percent of the country’s output, the sector’s health carries political implications — all the more so with the election just over a month away.
The latest manufacturing figures come ahead of a Friday jobs report that is expected to show a slowing recovery in the broader labor market, with unemployment projected to remain above 8 percent. The jobless rate was at 3.5 percent before the pandemic hit.