By Xavier Fontdegloria

Activity in the U.S. manufacturing sector expanded slightly in September for a second consecutive month amid muted demand for goods and easing inflation pressures, data from a purchasing managers survey showed Monday.

The S&P Global U.S. manufacturing PMI rose to 52.0 in September from 51.5 in August, virtually above the preliminary reading of 51.8. Economists polled by The Wall Street Journal expected the index to be unchanged from the flash estimate.

The indicator signals factory activity grew slightly in September, similar to levels registered in August, as the index came in close to the 50.0 threshold that separates expansion from contraction.

In September, both production and new orders rose, albeit only marginally, the report said.

"With U.S. manufacturers reporting a return to growth of order books for the first time in four months, as well as improved job gains, the September survey brings welcome news that business conditions are starting to improve again," said Chris Williamson, chief business economist at S&P Global.

However, the weakness of the data in recent months still point to manufacturing acting as a drag on the economy in the third quarter, he said.

New orders rose for the first time in four months as companies reported an improvement in demand conditions. Producers of both consumer goods and business equipment reported improved sales to the domestic market, while sales abroad declined due to slowing global growth and the dollar's strength, S&P Global said.

The survey also pointed to moderating inflation pressures. Input cost inflation was elevated but eased to the softest pace since January 2021 as prices for materials such as steel, plastics and lumber reportedly fell.

"With supply-chain delays also easing substantially again in September and shipping costs falling, upwards pressure on firms' costs has moderated sharply, which will feed through to lower goods prices to consumers," Mr. Williamson said.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

October 03, 2022 10:16 ET (14:16 GMT)