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US manufacturing index decelerates; tariffs are concern, tight labor market is constraint

October 01, 2018

Economic activity in the US manufacturing sector accelerated in September but at a slower rate than in August, according to the Institute for Supply Management’s manufacturing index, released today.

ISM’s manufacturing index fell in September to a reading of 59.8 from August’s reading of 61.3. Readings above 50 generally indicate improving conditions.

“Demand remains robust, but employment resources and supply chains continue to struggle, but to a lesser degree,” said Timothy Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “Respondents are again overwhelmingly concerned about tariff-related activity, including how reciprocal tariffs will impact company revenue and current manufacturing locations.”

The employment portion of the index edged up in September to 58.8 from August’s reading of 58.5, representing growth in employment for the 24nd consecutive month and reaching the highest level since February 2018, when it registered 59.7.

“Respondents continued to note labor-market issues as a constraint to their production and, more significantly, their suppliers’ production capability,” Fiore said.

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