U.S. ISM Manufacturing PMI Falls Sharply in October
by:Tom Moeller
|in:Economy in Brief
Summary
- Weakening follows two months of improvement.
- Declines are widespread.
- Prices index improves.
The Purchasing Managers Index of activity in the manufacturing sector fell to 46.7 in October after rising to 49.0 in September and 47.6 in August, according to the Institute for Supply Management. Remaining below 50, the figure indicated contraction in the U.S. manufacturing sector for the 12th successive month, though the rate of decline has eased. An October reading of 49.0 had been expected in the Action Economics Forecast Survey.
The new orders index fell to 45.5 last month from 49.2 in September. It was the lowest level since May. Fifteen percent (NSA) of survey participants reported higher new orders while 26.5% reported a decline. The production index declined to 50.4 from 52.5. It was the lowest level in two months. Seventeen percent of respondents reported higher production while 19.8% reported a decline. The employment reading dropped to 46.8 from 51.2, but remained up from a July low of 44.4. Twelve percent of respondents reported more jobs while 17.4% reported a decline.
In other components of the overall index, the inventory index moved down to 43.3 in October from 45.8 in September. It was the lowest level since June 2012. The supplier delivery series rose to 47.7 from 46.4, up versus a May low of 43.5.
The prices index rose to 45.1 (NSA) last month from 43.8 in September. It was the highest level in two months. Eleven percent of respondents reported higher prices while 20.9% reported lower prices.
The export series rose to 49.4 in October from 47.4 in September. It was the highest level in five months. The imports series weakened to 47.9 from 48.2 and remained below 49.6 in July. The order backlog series was little changed last month at 42.2. The index hit a low of 37.5 in May.
The ISM figures are based on responses from over 400 purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states.
These data are diffusion indexes where a reading above 50 indicates expansion. 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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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