Employment Falls as Manufacturers Cut Costs Amidst Weak Demand
In September, U.S. manufacturing moved further into contraction. The S&P Global U.S. Manufacturing PMI dropped to 47.3 in September from 47.9 in August, remaining below the 50 threshold that indicates a contraction in the sector.
Output and new orders fell at sharper rates in September amid stronger weakness in demand and political uncertainty. Employment also decreased at the steepest pace since the start of 2010, excluding the significant drop during the pandemic.
New export orders also declined to a larger extent in September, as demand weakened notably in Europe. With new orders continuing to fall, manufacturers scaled back production for the second consecutive month. The resulting drop in backlogs of work was the largest since January. Meanwhile, post-production inventories accumulated for the third straight month. Respondents felt generally optimistic about future business, buoyed by hopes that the current demand slump would be temporary and improve after the presidential election.
Input costs softened but remained marked, and manufacturers increased their selling prices at the fastest pace since April. The pace of inflation eased slightly despite higher costs for raw materials and a rise in shipping rates. The contraction in purchasing activity accelerated amid lower output, reducing input stocks by the largest amount seen in 2024.