A report from the Institute for Supply Management (ISM) showed on Thursday the U.S. manufacturing sector’s activity expanded in September, albeit at a slightly slower pace than in August.

The ISM's index of manufacturing activity came in at 55.4 percent last month, down 0.6 percentage points from the August reading of 56.0 percent. The reading pointed to the fourth straight month of growth in factory activity.

Economists' had forecast the indicator to increase to 56.4 percent.

A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

According to the report, the New Orders Index stood at 60.2 percent, a drop of 7.4 percentage points from the August reading and the Production Index registered 61 percent, down 2.3 percentage points compared to the August reading. Meanwhile, the Backlog of Orders Index posted 55.2 percent, 0.6 percentage point higher compared to the August reading, the Employment Index came in at 49.6 percent, an advance of 3.2 percentage points from the August reading, and the Supplier Deliveries Index was at 59 percent, up 0.8 percentage point from the August figure.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted that after the coronavirus (COVID-19) brought manufacturing activity to historic lows, the sector continued its recovery in September. He also added that the past relationship between the PMI and the overall economy indicates that the PMI for September (55.4 percent) corresponds to a 3.7-percent increase in real gross domestic product (GDP) on an annualized basis.