September Reports On Service Sector Mixed

September was another slow month for Markit's U.S. manufacturing sample with the composite index slipping 5 tenths from August to 51.5. New orders slowed to the weakest growth rate of the year while export sales contracted for the first time in four months which the report ties to strength in the dollar. Production slowed to a 3-month low, hiring during the month was soft, and the sample continues to cut inventories which indicates lack of confidence in the business outlook. One plus in the report is a slight increase in backlog orders. Otherwise, pluses are hard to find in this report. Input costs are up slightly and selling prices continue to slip. Unlike other reports, this report is citing the presidential election as a factor, specifically a negative one that it says is delaying customer decisions.

...meanwhile...

August proved to be a one-month letdown for ISM's manufacturing sample as the September index bounced more than 2 points higher to a much better-than-expected 51.5. New orders are the most important of all readings and they lead the September report, rising 6 points to a very solid 55.1. Export orders are respectable and steady at 52.0 while the draw in total backlog orders slowed, with this index up 4 points and nearly hitting breakeven 50 at 49.5. Production also improved in the month, up 1.4 points to 52.8, as did employment which, at 49.7, is also nearly at 50. This is a positive report, pointing to rising though no more than moderate strength for the nation's factory sector.

Recent History Of This Indicator:
The ISM manufacturing index fell into sub-50 contraction to 49.4 in a disappointing August result that included an 8 point fall for new orders to 49.1. Both production and employment also slowed in the month. Before August, this report had been building momentum. Forecasters see the September index bouncing back over 50 but not by much, to a consensus 50.2.