NEW YORK – The overall economy grew for the twenty-ninth straight time, while the manufacturing sector expanded for the twenty-seventh time, the Institute for Supply Management reported Tuesday.
According to the ISM’s monthly report on business, the ISM index slipped to 50.8 in October from 51.6 in September.
Economists polled by Thomson Reuters predicted the index would climb to 52.0.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
“The PMI registered 50.8 percent, a decrease of 0.8 percentage point from September’s reading of 51.6 percent, indicating expansion in the manufacturing sector for the 27th consecutive month," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. “The New Orders Index increased 2.8 percentage points from September to 52.4 percent, indicating a return to growth after three months of contraction. The Prices Index, at 41 percent, dropped 15 percentage points, and is below the 50 percent mark for the first time since May 2009 when it registered 43.5 percent. Inventories decreased to 46.7 percent, which is 5.3 percentage points below the September reading of 52 percent. Comments from respondents are mixed, indicating positive relief from raw materials pricing and continuing strength in a few industries, but there is also more concern and caution about growth in this uncertain economy.”
The closely watched prices paid index slumped to 41.0 from 56.0. The employment index was at 53.5, off from 53.8 the prior month.
The production index decreased to 50.1 from 51.2, the new orders index grew to 52.4 from 49.6; the supplier deliveries index dipped to 51.3 from 51.4; the export orders index decreased to 50.0 from 53.5; and the imports index slid to 49.5 from 54.5.
The inventories index fell to 46.7 from 52.0; the customers’ inventories index dropped to 43.5 from 49.0; and backlog of orders slumped to 41.5 from 41.5.
Respondents’ comments included:
“Starting to see some deflation on raw materials.” (Chemical Products)
“Overall industry volumes remain flat vs. previous month. Uncertainty in supply chain is increasing due to lower volumes vs. historical.” (Electrical Equipment, Appliances & Components)
“International: contraction in demand for our products is driving mitigation of excess material on order. Contract manufacturers are adjusting their resources accordingly.” (Machinery)
“Business is very strong, both domestically and internationally.” (Fabricated Metal Products)
“With metal prices declining, we are seeing some short-term forecast strength. If metal pricing increases again, this strength is expected to disappear again.” (Primary Metals)
“Auto industry still strong.” (Transportation Equipment)
“Business is slowing — not crashing — but uncertainty and caution is the order of the day.” (Plastics & Rubber Products)
“Retail branded business is slower than expected due to consumers continuing to move to private label- and store-brand products for price advantage. Raw material supplies are in good shape, but prices are staying stubbornly higher than expected.” (Food, Beverage & Tobacco Products)
