ISM Signals Expansion at a Slower Pace
ISM Manufacturing slowed to 59.8 in September. New orders and order backlogs both fell and are now below their respective six-month averages. Four separate respondents cited tariffs as a headwind.
A notable shift from August was in supplier deliveries, which slipped 3.4 points to 61.1. That reading still indicates that supply chains are tight, but not quite as stretched as they were earlier. Nearly matching that decline was the 3.3 point slowing for the new orders component, which now sits at 61.8. Again, this is still consistent with growth in factory orders, but likely at a more moderate pace.
The biggest mover among the subcomponents was the measure of prices paid, which slipped 5.2 points to 66.9. That is the first print below 70 so far this year.
Export orders increased, but only five industries reported growth in September; ten were flat and three reported a decline. The ones reporting declines were metals, plastic and rubber products and transportation. Four comments cited tariffs as a challenge.
ISM Manufacturing Report on Business Supplier Deliveries
ISM Manufacturing Report on Business Prices Paid Index
ISM Manufacturing Report on Business New Orders Index
ISM Manufacturing Report on Business Export Orders Index
Construction Spending Edges Higher in August
Total construction spending rose 0.1% in August. Most of the gain occurred in the nonresidential category. Higher building costs are likely limiting activity, but spending should remain solid for the rest of the year.
Spending Steadily on the Rise
Construction spending rose 0.1% in August. Much of the gain occurred in nonresidential outlays, which increased 0.7%, while residential dropped 0.7%. Revisions were slightly positive on balance, and total spending is now 5.3% higher year-to-date.
Rising material and labor costs are continuing to slow down residential activity. Single-family, multifamily and expenditures on improvements dropped during the month.
Nonresidential Spending Climbs Higher
Nonresidential outlays have increased in each of the past 12 months and are up 4.4% year-to-date, driven by public spending on highway and street projects and educational buildings.
Nonresidential spending should continue to be solid in the second half of the year. The Architecture Billings Index, which leads construction activity by 9-12 months, has been solidly in expansion territory this year, notably in the South.
-R.W.N II, yours in 322.
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