NEW YORK - The overall economy grew for the eighteenth straight time after seven months of contraction, while the manufacturing sector expanded for the fifteenth 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 gained to 56.9 in October from 54.4 in September.
Economists polled by Thomson Reuters predicted the index would slip to 54.0.
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 during October, with both new orders and production making significant gains," said Norbert J. Ore, chair of the Institute of Supply Management's manufacturing business survey committee. “Since hitting a peak in April, the trend for manufacturing has been toward slower growth. However, this month's report signals a continuation of the recovery that began 15 months ago, and its strength raises expectations for growth in the balance of the quarter. Survey respondents note the recovery in autos, computers and exports as key drivers of this growth. Concerns about inventory growth are lessened by the improvement in new orders during October. With 14 of 18 industries reporting growth in October, manufacturing continues to outperform the other sectors of the economy.”
The closely watched prices paid index gained to 71.0 from 70.5. The employment index was at 57.7, up from 56.5 the prior month.
The production index increased to 62.7 from 56.5, the new orders index rose to 58.9 from 51.1; the supplier deliveries index slipped to 51.2 from 52.3; the export orders index increased to 60.5 from 54.5; and the imports index dropped to 51.5 from 56.5.
The inventories index fell to 53.9 from 55.6; the customers’ inventories index grew to 44.0 from 42.5; and backlog of orders slipped to 46.0 from 46.5.
Respondents’ comments included:
"The dollar is weakening again, which is resulting in higher costs for our materials we purchase overseas. It is hurting our profit margins." (Transportation Equipment)
"Business slowing down but still double digit over last year." (Chemical Products)
"Currency continues to wreak havoc with commodity pricing." (Food, Beverage & Tobacco Products)
"Customers remain cautious, placing orders at the last minute, making supply planning a challenge." (Machinery)
"Our customer base — auto manufacturers — is expanding capacity and making major capital investments." (Fabricated Metal Products)
