NEW YORK (Reuters) - Manufacturing closed out its weakest quarter in three years this month as foreign demand for U.S. goods continued to fade, an industry survey showed on Thursday.
Financial information firm Markit said its U.S. “flash”, or preliminary, manufacturing Purchasing Managers Index stood at 51.5 in September, unchanged from August. A reading above 50 indicates expansion.
The index averaged 51.5 in the third quarter, below the 54.2 registered between April and June, for its worst showing since the third quarter of 2009. At 51.2, the output component was the lowest since September 2009.
“With output growing at the slowest pace since the recovery began, the manufacturing sector may have even acted as a slight drag on the economy in the third quarter,” Markit chief economist Chris Williamson said.
After growing at a 1.7 percent pace between April and June, the economy likely slipped “closer towards stagnation” between July and September, Williamson said.
Manufacturing had been one of the few positive contributors to growth through 2010 and 2011 but began to slow earlier this year. Recessions in several European countries and slower growth in Asia have contributed to that by undermining U.S. exports.
While overall new orders received by U.S. factories rose in September, firms endured the steepest reduction in new export orders in nearly a year. The decline in exports this month was the fourth in a row.
Hiring strengthened slightly on the month, with the employment component edging up to 52.7 from 52.4, but the pace of job creation remained sluggish.
Input prices rose for a second consecutive month, led by higher costs for energy, resin and rubber, but remained well below the rate of increase seen in early 2012.
Even so, Williamson said rising price pressures for factories could push up consumer prices in September.
Consumer price inflation was a fairly tame 1.7 percent in the year to August and has long remained within the Federal Reserve’s comfort zone.
Against such a backdrop, the U.S. central bank announced last week plans to inject more money into the financial system through mortgage bond purchases and said it would keep interest rates at zero for the better part of the next three years.
The “flash” reading is based on replies from about 85 percent of the U.S. manufacturers surveyed. Markit’s final reading will be released on the first business day of the following month.
Reporting by Steven C. Johnson; Editing by Dale Hudson