Analysis
The composite reading indicates that more surveyed manufacturers reported improving activity than deteriorating activity, but it does not measure the size of dollar output or price changes. New orders rose to 55.3 and employment to 52.7; production remained in expansion at 56.7 but slowed from August. At the same time, the prices index moved to 77.9, while inventories fell to 48.6. The combination gives a mixed picture for manufacturers and their suppliers: survey demand and hiring signals remained expansionary, but reported input-price pressure strengthened and inventories contracted. This is a purchasing-managers diffusion survey and complements government production, employment and price data rather than replacing them.
What remains uncertain
ISM reports respondents’ breadth and direction of change, not dollar output, realized inflation or total job gains. The indexes are survey measures and may diverge from later government data; the release attributes comments about costs to respondents and does not establish the cause of the month-to-month price-index change.