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US Manufacturing Index Retreats in September

Institute for Supply Management's. purchasing managers' index retreats after major gain in August. But analysts expect it to climb overall through early 2010.

By John McCloud | Updated on October 14, 2009

TEMPE, AZ-Economic activity in the manufacturing sector expanded in September for the second consecutive month, according to the most recent report from the Institute for Supply Management. But despite the overall gain, analysts were disappointed by slippage in the report’s crucial purchasing managers’ index (PMI).

The all-important PMI dropped three-tenths of a point to 52.6 last month after climbing a full four points to 52.9 in August. Only a day before the report was released, analysts at Copenhagen-based Danske Bank had forecast the index would climb to 55, one point above the 54 figure they identified as the consensus forecast. In the bank’s Weekly Forecast of Oct. 2, they expressed dismay at the actual outcome, saying financial markets were “shaken” by the fallback. “It sent a clear warning that the recovery cannot be taken for granted,” they wrote, adding, “[I]t may be that the burden of proof between economic bulls and bears will be shifting for a while with the bears getting more ammunition.”

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