U.S. Manufacturing Index Drops To Two-Year Low In September

(RTTNews) - Partly reflecting concerns about the global economy and customer confidence, the Institute for Supply Management released a report on Thursday showing that its reading on activity in the U.S. manufacturing sector fell to a two-year low in September.

The ISM said its purchasing managers index dropped to 50.2 in September from 51.1 in August, although a reading above 50 indicates growth in the sector. Economists had expected the index to dip to 50.5.

With the bigger than expected decrease, the manufacturing index fell to its lowest level since hitting 50.1 in May of 2013.

The decrease by the headline index partly reflected a slowdown in the pace of new orders growth, as the new orders index slid to 50.1 in September from 51.7 in August.

The production index also fell to 51.8 in September from 53.6 in August, while the employment index dipped to 50.5 from 51.2.

On the inflation front, the ISM said the prices index dropped to 38.0 in September from 39.0 in August, indicating lower raw materials prices for the eleventh consecutive month.

James Knightley, an economist at ING Bank, said, "This is a disappointing report, but we have to remember that the manufacturing sector only directly accounts for around 15% of economic activity and everything else seems to be doing reasonably well."

The ISM is scheduled to release a separate report next Monday on activity in the service sector in the month of September.