The U.S. manufacturing sector contracted again in September, though at a slower pace than in previous months. Fresh data released Wednesday highlighted the ongoing challenges companies face in an uncertain trading environment.
The Institute for Supply Management (ISM) reported that its manufacturing PMI rose to 49.1 in September. This was slightly above expectations of 49.0 and higher than August’s reading of 48.7. However, the index remained below the crucial 50-point threshold that separates contraction from expansion.
The PMI is widely viewed as a key indicator of U.S. manufacturing health and provides insight into the broader economic outlook. While the sector remains under pressure, some positive signs emerged. The employment component improved, rising to 45.3 in September compared to 43.8 in August.
Although the ISM employment index is not always a reliable predictor of the official nonfarm payrolls report, investors are paying close attention. The possibility of a government shutdown delaying labor data makes this measure even more relevant.
Labor market strength has been central to Federal Reserve policy moves. The Fed cut interest rates in September as signs of cooling employment weighed on its decision. Recent reports showed job openings increased slightly in August, while hiring slowed. Meanwhile, the ADP National Employment Report revealed the steepest decline in private payrolls in over two years.
