Economic activity in the manufacturing sector expanded in September following three consecutive months of slight contraction, and the overall economy grew for the 40th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee. "The PMI registered 51.5%, an increase of 1.9% points from August's reading of 49.6%, indicating a return to expansion after contracting for three consecutive months. The New Orders Index registered 52.3%, an increase of 5.2 percentage points from August, indicating growth in new orders after three consecutive months of contraction. The Production Index registered 49.5%, an increase of 2.3 percentage points and indicating contraction in production for the second time since May 2009. The Employment Index increased by 3.1 percentage points, registering 54.7%. The Prices Index increased 4 percentage points from its August reading to 58%. Comments from the panel reflect a mix of optimism over new orders beginning to pick up, and continued concern over soft global business conditions and an unsettled political environment."

Performance by Industry

Of the 18 manufacturing industries, 11 are reporting growth in September in the following order:

•   Textile Mills
•   Food, Beverage & Tobacco Products
•   Printing & Related Support Activities
•   Wood Products
•   Apparel, Leather & Allied Products
•   Paper Products
•   Petroleum & Coal Products
•   Primary Metals
•   Fabricated Metal Products
•   Furniture & Related Products
•   Miscellaneous Manufacturing

The six industries reporting contraction in September — listed in order — are:

•   Nonmetallic Mineral Products
•   Electrical Equipment, Appliances & Components
•   Transportation Equipment
•   Machinery
•   Chemical Products
•   Computer & Electronic Products

What respondents are saying ...

• "Appears that our so-called 'slowdown' was a summer thing. September brings with it increasing requirements and business." (Paper Products)
• "Business improved through Q3, but is beginning to show signs of slowing down in Q4; this has been a typical trend over the last few years." (Wood Products)
• "Business has picked up going into the last quarter." (Plastics & Rubber Products)
• "We are sticking to our manufacturing plan, but have slowed production down considerably. Haven't added any new units to the 2012 plan, and still have no forecast for 2013 released." (Computer & Electronic Products)
• "Sales have tanked over the last two months, bringing a very concerned and stressed management team. Not very optimistic for the near-term future." (Apparel, Leather & Allied Products)
• "Uncertainty in the healthcare legislation (reform) continues to be the underlying force keeping our sales revenue below its full potential." (Miscellaneous Manufacturing)
• "Steel and aluminum prices still dropping, and auto production orders are up." (Transportation Equipment)
• "Domestic business is up; international is down." (Electrical Equipment, Appliances & Components)
• "Demand seems to have stabilized from August. New orders are appearing this month without advanced notice from our customers." (Chemical Products)

Read the full September Manufacturing ISM Report On Business.