U.S. manufacturers expanded at the slowest pace in more than two years in September, according to a survey released Thursday by the Institute for Supply Management, a sign of tepid growth in a sector getting squeezed by a stronger dollar and weak overseas demand.
The ISM's manufacturing purchasing managers index slipped to 50.2 in September from 51.1 in August. That was the lowest level since May 2013. A reading above 50 indicates that the manufacturing economy is generally expanding.
Economists surveyed by The Wall Street Journal had expected the index to fall to 50.8.
The September numbers are the latest in a string of mixed reports for U.S. factories. The ISM index shows manufacturing activity has expanded for 33 straight months, though the pace has slowed markedly from last summer when it touched 58.1.
Other gauges have been weaker, with the Federal Reserve's measure of manufacturing output down in August and a recent Commerce Department report showing a drop in exports of autos and consumer goods.
The ISM new orders index decreased to 50.1 last month from 51.7 in August. The new orders component of the index is often viewed as a leading indicator of activity.
The ISM production index sank to 51.8 from 53.6.
The employment index dropped to 50.5 in September from 51.2 in August. The Labor Department will release the September employment report Friday. Economists surveyed by The Wall Street Journal think the U.S. economy added 200,000 jobs last month, up from 173,000 in August.
And the ISM exports index held steady at 46.5, a signal of soft global growth and the relative strength of the dollar.
A separate survey out Thursday also suggested manufacturing activity remained constrained. The final U.S. purchasing managers index compiled by data provider Markit rose to a seasonally adjusted 53.1 in September from a final August reading of 53.0, which was a 22-month low.
"The U.S. manufacturing sector has seen a distinct loss of growth momentum in recent months," said Chris Williamson, chief economist at Markit. "Headwinds include the rising dollar, weak demand in global markets, a downturn in business investment and financial market jitters.
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