NEW YORK - The overall economy grew for the sixth straight time after seven months of contraction, while the manufacturing sector expanded for the third time after eighteenth months of contraction, the Institute for Supply Management reported this morning.
According to the ISM’s monthly report on business, the ISM index jumped to 55.7 in October from 52.6 in September.
Economists polled by Thomson Reuters predicted the index would rise to 53.0.
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 manufacturing sector grew for the third consecutive month in October, and the rate of growth is the highest since April 2006 when the PMI registered 56 percent," said Norbert J. Ore, chair of the Institute of Supply Management's manufacturing business survey committee. “The jump in the index was driven by production and employment, with both registering significant gains. Production appears to be benefiting from the continuing strength in new orders, while the improvement in employment is due to some callbacks and opportunities for temporary workers. Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode.”
The closely watched prices paid index rose to 65.0 from 63.5. The employment index was at 53.1, up from 46.2 the prior month.
The production index increased to 63.3 from 55.7, the new orders index slid to 58.5 from 60.8; the supplier deliveries index slipped to 56.9 from 58.0; the export orders index increased to 55.5 from 55.0; and the imports index fell to 51.0 from 52.0.
The inventories index increased to 46.9 from 42.5; the customers’ inventories index slid to 38.5 from 39.0; and backlog of orders remained at 53.5.
Respondents’ comments included:
“We are beginning to be affected greatly by lead-time increases on semiconductor components.” (Computer & Electronic Products)
“Still a very difficult environment — commodity increases threaten recovery and don’t seem to correlate with any supply/demand fundamentals.” (Food, Beverage & Tobacco Products)
“Automotive demand still remains strong even after ‘cash for clunkers.’” (Fabricated Metal Products) [indicated for the second month]
“After several rather busy months, we are seeing the order intake for early next year soften.” (Transportation Equipment)
“The improvement seen earlier is not holding.” (Primary Metals)
