The overall economy grew for the forty-first straight time, while the manufacturing sector expanded for the second consecutive month, the Institute for Supply Management reported Thursday.
According to the ISM's monthly report on business, the ISM index climbed to 52.7 in October from 51.5 in September.
Economists polled by Thomson Reuters predicted the index would hold at 51.5.
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 51.7 percent, an increase of 0.2 percentage point from September's reading of 51.5 percent, indicating growth in manufacturing at a slightly faster rate," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. "The New Orders Index registered 54.2 percent, an increase of 1.9 percentage points from September, indicating growth in new orders for the second consecutive month. The Production Index registered 52.4 percent, an increase of 2.9 percentage points, indicating growth in production following two months of contraction. The Employment Index registered 52.1 percent, a decrease of 2.6 percentage points, and the Prices Index registered 55 percent, reflecting a decrease of 3 percentage points. Comments from the panel this month reflect continued concern over a fragile global economy and soft orders across several manufacturing sectors."
The closely watched prices paid index declined to 55.0 from 58.0. The employment index slipped to 52.1 from 54.7 the prior month.
The production index increased to 52.4 from 49.5, the new orders index rose to 54.2 from 52.3; the supplier deliveries index fell to 49.6 from 50.3; the export orders index dipped to 48.0 from 48.5; and the imports index slid to 47.5 from 49.5.
The inventories index fell to 50.0 from 50.5; the customers’ inventories index slid to 49.0 from 49.5; and backlog of orders dropped to 41.5 from 44.0.
Respondents' comments included:
"Market is still very soft." (Paper Products)
"Business is picking up." (Furniture & Related Products)
"[Our] 4th quarters usually begin to show a slowdown in demand, and this year is no different; prices are also dropping." (Wood Products)
"Demand down slightly due to customers pre-buying ahead of announced material price increases." (Plastics & Rubber Products)
"The slowing of capital expenditure in Europe and China has lowered our backlog for Q4." (Computer & Electronic Products)
"We see a general softening in the steel and automotive markets in the fourth quarter." (Fabricated Metal Products)
"Cuts in healthcare reimbursement rates continue to negatively affect top-line revenue." (Miscellaneous Manufacturing)
"Business conditions stable to slightly improving." (Transportation Equipment)
"Sales and order intake have slowed." (Primary Metals)
"Europe is still very much a concern. Global recovery is still fragile." (Chemical Products)