U.S. ISM Manufacturing Index Eases in October

The ISM Purchasing Managers Index of activity in the manufacturing sector slipped to 46.5 during October from 47.2 in September. It was the lowest level since July of last year and below the break-even level of 50.3 reached in March. A level of 47.6 in October had been expected by the Action Economics Forecast Survey.

Performance of the component indexes was mixed last month. The production index declined to 46.2 after rising to a four-month high of 49.8 in September. Seventeen percent of respondents reported higher production while 23.9% reported it lower. The inventories reading eased to 42.6 from 43.9, both readings down sharply from a high of 50.3 in August. The supplier delivery index slipped to 52.0 from 52.2, after hitting a high of 52.6 in July. Working higher, the new orders index rose to 47.1 from 46.1 in September. Twenty percent of respondents had increased orders but 29% realized declines. The employment reading rose to 44.4 from 43.9 in October, but it remained down from a high of 51.1 in May.

The prices index, which is not part of the composite series, rose to 54.8 (NSA) from 48.3 in September. An increased 19.8% of respondents reported higher prices last month while a lessened 10.3% reported lower prices.

In other series, export orders fell to a little-changed 45.5, down from a March high of 51.6. The imports index remained at 48.3, also off a March of 53.0 while order the order backlog index declined to 42.3, a three-month low.

The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver’s AS1REPNA database.