The index that tracks activity in the U.S. manufacturing industry showed a contraction for the 11th-consecutive month. The pace of contraction was the slowest in almost a year as companies prepare for higher consumer demand in the fourth quarter.

The manufacturing Purchasing Managers' Index (PMI) rose to 49 in September from 47.6 in August, the Institute for Supply Management's said in a statement Monday.

A reading below 50 indicates a contraction. The PMI has been under that level since November, the longest period of contraction since the 2007-2009 recession.

The index that tracks new orders rose to 49.2 in September from 46.8 in August. The production index showed an expansion with a reading of 52.5 from 50 in the previous month.

A welder works while building a bus frame at the BYD electric bus factory in Lancaster, California, U.S., July 1, 2021. Picture taken July 1, 2021.
U.S. manufacturing contracts at slower pace in September. Reuters / MIKE BLAKE

"Companies are still managing outputs appropriately as order softness continues, but the month-over-month PMI improvement in September is a clear positive," Timothy Fiore, Chair of ISM's Manufacturing Business Survey Committee said in the statement.

"Demand remains soft, but production execution improved compared to August as panelists' companies prepared for the fourth quarter and the close of the fiscal year."