Manufacturing PMI shifts back into expansion

By Jeffrey Sparshot, for Wall Street Journal

Oct 05, 2016

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The U.S. factory sector regained its footing in September, though overall growth remains tepid amid weak business spending and lackluster economic expansion.

The Institute for Supply Management on Monday said its manufacturing index increased to 51.5 in September from 49.4 in August. A reading above 50 indicates that factory activity is growing, while a reading under 50 signals contraction.

While the return to growth is encouraging, the sector is only inching ahead this year.

Monday’s report showed that only seven of the 18 industries surveyed reported expansion while the other 11 were contracting. Overall, new orders rebounded strongly but factories aren’t adding workers and customer inventories are too large.

“The bottom line is that the manufacturing sector still faces challenging conditions,” said Richard Moody, chief economist at Regions Financial Corp.

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