WASHINGTON, Oct 1Reuters U.S. manufacturing held steady at weaker levels in September, but new orders improved and prices paid for inputs declined to a ninemonth low, which together with falling interest rates bode well for a rebound in activity in the coming months.

The Institute for Supply Management ISM said on Tuesday its manufacturing PMI was unchanged at 47.2 last month. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.3 of the economy.

It was the sixth consecutive month that the PMI remained below the 50 threshold, but above the 42.5 level that the ISM said over time generally indicates an expansion of the overall economy. The survey has, however, exaggerated the weakness in manufacturing, with the socalled hard data such as factory production and durable goods orders showing the sector largely moving sideways.

Gross domestic product data last week showed manufacturing output rising at a 2.6 annualized rate in the second quarter, an acceleration from the 0.2 pace posted in the JanuaryMarch quarter. Further gains are likely after the Federal Reserve cut interest rates last month for the first time since 2020.

The U.S. central bank is expected to deliver two more rate cuts in November and December.

The ISM survey39;s forwardlooking new orders subindex increased to 46.1 last month from 44.6 in August. Output eyed a recovery, with the production subindex rising to 49.8 from 44.8 in August.

Manufacturers faced low…