Manufacturing in US deteriorates on weaker global demand

A worker assembles stand mixers on the production line at the Whirlpool Corp. KitchenAid manufacturing facility in Greenville, Ohio, US.
A worker assembles stand mixers on the production line at the Whirlpool Corp. KitchenAid manufacturing facility in Greenville, Ohio, US.PHOTO: BLOOMBERG

WASHINGTON (BLOOMBERG) - American manufacturing stagnated in September as a stronger dollar and faltering overseas markets led to the slowest pace of orders since November 2012.

The Institute for Supply Management's factory index decreased to 50.2, the third straight decline and the weakest since May 2013, from 51.1 the prior month, the Tempe, Arizona- based group's report showed Thursday. Fifty is the dividing line between expansion and contraction. The median forecast of economists surveyed by Bloomberg called 50.6.

The figures showed export demand matched the weakest since July 2012 as economies from China to the euro area struggle to improve. While resilient spending by U.S. consumers is helping underpin manufacturing, the stronger dollar is making it more expensive for foreign buyers to purchase made-in-America merchandise.

The outlook for manufacturing is "not looking good, in a phrase," Jay Morelock, an economist at FTN Financial in New York, said before the report. "If demand is slowing at the same time that the dollar is appreciating, then our exports are going to get hit." Estimates of 85 economists in the Bloomberg survey ranged from 49 to 52.

The ISM's measure of new orders dropped to 50.1 last month from 51.7, while the production gauge decreased to 51.8 from 53.6 in August. The export orders index held at 46.5.

The measure of factory employment declined to 50.5 in September from 51.2 the previous month. The prices paid index fell to 38 from 39.

The inventory gauge was unchanged at 48.5. Figures less than 50 means stockpiles are shrinking.

Like the ISM report, regional factory surveys have deteriorated over the last several weeks, fueling concerns that international threats to growth are spreading to U.S. shores. Seven of these surveys were released over the course of September, and all pointed to shrinking manufacturing.