ISM Manufacturing Activity Index Higher Than Expected

Manufacturing activity rose in September for the 16th consecutive month, but at a more gradual pace than in August, an industry research group reported Friday.

The Institute for Supply Management (search) said that its manufacturing index registered 58.5 in September, down from 59 in the previous month, and slightly higher than the 58.3 reading forecast by analysts.

An ISM reading of 50 or above means that the manufacturing sector is expanding, while a figure below 50 represents a contraction. The index has been above 50 since June of last year.

"The manufacturing sector continued to grow during September, but at a slightly slower rate," said Norbert J. Ore, chair of ISM's manufacturing survey committee. "Both new orders and production remain strong, and employment growth has accelerated."

Ore said manufacturers surveyed indicated generally favorable conditions, although some reported problems caused by recent hurricanes. Many companies said that they have stepped up hiring of both blue-collar and white-collar workers (search). Manufacturers said they are increasing their inventories, partly to hedge against price increases, but also because business continues to improve.

In September, 15 sectors reported growth, led by miscellaneous manufacturing and followed by glass, stone and aggregate, rubber and plastic products, industrial and commercial equipment and computers, tobacco and apparel. Others reporting growth were transportation and equipment, chemicals, food, wood and wood products, electronic components and equipment, printing and publishing, instruments and photographic equipment, paper and fabricated metals.