US manufacturing activity cooled a bit in September from a sizzling August, but the sector mainly was upbeat about the business outlook, the Institute for Supply Management said Wednesday.
The ISM's manufacturing purchasing managers index fell to 56.6 in September from 59.0 in August, which was the highest level in three years. A PMI reading above 50 indicates expansion.
The monthly decline was larger than expected, with analysts generally estimating a dip to 58.5.
Still, the ISM manufacturing index remained in growth mode in September for the 16th consecutive month.
"Comments from the panel reflect a generally positive business outlook, while noting some labor shortages and continuing concern over geopolitical unrest," said Bradley Holcomb, chair of the ISM manufacturing survey committee.
Declines in components of the index were broad-based last month, led by new orders, which tumbled 6.7 percentage points to 60.
The production component edged up 0.1 percentage point to 64.6, while employment fell by 3.5 points to 54.6.Of the 18 manufacturing industries covered by the ISM survey, three reported contraction in September: machinery; plastics and rubber products; and electrical equipment, appliances and components.
"All told, the ISM manufacturing index doesn't sound any alarms and is consistent with decent gains in factory production late this quarter and early next," said Ryan Sweet of Moody's Analytics.