Manufacturing in U.S. Expands Unexpectedly

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Ken O’Brien
Manufacturing unexpectedly expanded in Septemberafter three months of contraction, reflecting stronger orders that ease concernthe U.S. economy will slow further.
The Institute for Supply Management’s factory indexrose to 51.5 last month from 49.6 in August, the Tempe, Arizona-based groupsaid yesterday. Readings above 50 show expansion, and the September measureexceeded the most optimistic forecast in a Bloomberg survey.
The ISM’s new orders measure rose to a four-monthhigh of 52.3 from 47.1. The employment index advanced to 54.7 from an almostthree-year low of 51.6 the prior month. The gain from August was the biggestsince October 2009. The group’s measures of production, export demand, pricespaid and order backlogs also climbed in September.
The figures showed American factories are holding upin contrast to their counterparts in Europe and Asia.
The ISM figures compare with others showing weaknessworldwide. In the euro-area, manufacturing contracted for a 14th month inSeptember, suggesting the economy may have struggled to avoid a recession inthe third quarter. A gauge of the industry in the 17-nation currency regionbased on a survey of purchasing managers was 46.1, Markit Economics said today.The index has held for 14 months below 50, indicating contraction, and fell aslow as 44 in July.
U.K. factories shrank more than economists forecastand export orders declined for a sixth month. A measure based on a survey ofpurchasing managers fell to 48.4 from 49.6 in August, Markit Economics and theChartered Institute of Purchasing and Supply said in London today.
In China, manufacturing contracted for an 11thstraight month, increasing pressure on the government to bolster growth in theworld’s second-largest economy. The purchasing managers’ index from HSBCHoldings Plc and Markit Economics was at 47.9 last month, compared with 47.6 inAugust. Export orders declined at the fastest pace in 42 months and factorypurchasing activity fell for a fifth consecutive month, the Sept. 29 reportshowed.
“We are in no way thinking we’re going to see arecession in 2013,” Caterpillar Inc. Chairman and ChiefExecutive Officer Doug Oberhelman said. “Europe’s in recession today, probablygoing be a while to dig out.”
To boost growth and stimulate more hiring that mayprovide a spark for the economy, the Fed last month said it would keep itstarget interest rate close to zero until at least mid-2015 and began a thirdround of stimulus, buying $40 billion in mortgage bonds a month.
“If the outlook for the labor market does notimprove substantially, the committee will continue its purchases of agencymortgage-backed securities, undertake additional asset purchases and employ itsother policy tools as appropriate,” the Federal Open Market Committee saidSept. 13 in a statement at the end of a two-day meeting in Washington.