US Manufacturing Grew Faster in October as Production Hit Its Highest Level Since 2021
The Institute for Supply Management said its manufacturing index rose to 55.5 in October from 54.5 in September, with production at its highest since November 2021, even as input prices stayed high.
United States manufacturing activity picked up in October, the Institute for Supply Management said on Monday, with its manufacturing index rising to 55.5 from 54.5 in September. The reading was the 10th straight month above 50, the line that separates growth from contraction, and it beat the forecast of economists polled by Reuters, who had expected the index to stay at 54.5. Manufacturing accounts for about 9.4 percent of the economy, according to Reuters.
The new orders index edged up to 55.5 from 55.3 in September, and the production index rose to 59.0 from 56.7, its highest since November 2021, when it was 60.5, according to Susan Spence, chair of the Institute for Supply Management Manufacturing Business Survey Committee. Twelve industries reported growth in October and three reported contraction, and five of the six largest manufacturing industries expanded.
Prices stayed high even as cost pressures eased
The survey’s gauge of prices paid for inputs eased to 75.2 from 77.9 in September, but it stayed high enough to support the view among economists that inflation will run above the Federal Reserve’s 2 percent target into 2027, Reuters reported. The government reported last week that the Personal Consumption Expenditures price index rose 3.6 percent from a year earlier in September. The Federal Reserve left its benchmark overnight interest rate in the 3.75 percent to 4.00 percent range last Wednesday, and economists expect the central bank to raise borrowing costs in December.
Factory employment kept growing but at a slower pace, with the employment index easing to 52.4 from 52.7 in September. Supplier deliveries slowed further, with that index inching up to 59.1 from 59.0, a sign that suppliers were struggling to keep up with demand. Inventories returned to growth at 51.4, up from 48.6 in September, while the backlog of orders eased to 54.6 from 56.4. New export orders rose to 51.2 from 50.9, and imports rose to 52.9 from 51.0.
Survey sentiment got worse for a third month in a row, with 34 percent of comments positive and 66 percent negative, the Institute for Supply Management said. Among negative comments, pricing volatility was mentioned in 62 percent, longer lead times in 41 percent, tariffs in 25 percent, and the Iran war in 21 percent. The Institute for Supply Management said the overall economy expanded for the 24th month in a row, and Spence said the October reading corresponds to a 2.7 percent increase in real gross domestic product on an annualized basis.
Reporting based on coverage by Reuters and the Institute for Supply Management.
