US manufacturing activity increased in September but at a slower rate than August, according to the Institute for Supply Management’s Manufacturing PMI. Hiring activity in manufacturing slowed as well.

“The US manufacturing sector continues to expand, but at the lowest rate since the pandemic recovery began,” said Timothy Fiore, chair of the ISM’s Manufacturing Business Survey Committee.

The measure of US manufacturing activity fell to a reading of 50.9% in September from 52.8% in August. The reading for September was the lowest since May 2020.

“Following four straight months of panelists’ companies reporting softening new orders rates, the September index reading reflects companies adjusting to potential future lower demand,” Fiore said.

The employment index portion of the Manufacturing PMI contracted in September. It fell to a reading of 48.7%, down from 54.2% in August. There were reports of companies managing headcount through hiring freezes and attrition; however, layoffs did not appear to occur.

“Markedly absent from panelists' comments was any large-scale mentioning of layoffs; this indicates companies are confident of near-term demand, so primary goals are managing medium-term head counts and supply chain inventories,” Fiore said.