A
report from the Institute for Supply Management (ISM) showed on Monday the U.S.
manufacturing sector’s activity expanded in October albeit at a slightly slower pace
than in September.
The
ISM's index of manufacturing activity came in at 60.8 percent last month, down 0.3
percentage point from an unrevised September reading of 61.1 percent. The October reading pointed to the
growth in the manufacturing sector for the 17th straight month.
Economists'
had forecast the indicator to slip to 60.5 percent.
According
to the report, the New Orders Index plunged 6.9 percentage points m-o-m to 59.8
percent in October, while the Backlog of Orders Index declined 1.2 percentage
points to 63.6 percent and the Production Index edged down 0.1 percentage point
to 59.3 percent. At the same time, the Supplier Deliveries Index jumped 2.2
percentage points to 75.5 percent in October, the Employment Index rose 1.8
percentage points to 52.0 percent and the Inventories Index increased 1.4
percentage points to 57.0 percent. On the price front, the Prices Index surged
4.5 percentage points to 85.7 percent.
Timothy
R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted that
the manufacturing economy continued its growth in October but Survey Committee
members reported that their companies and suppliers continue to deal with an
unprecedented number of hurdles to meet increasing demand. “All segments of the
manufacturing economy are impacted by record-long raw materials lead times,
continued shortages of critical materials, rising commodities prices and
difficulties in transporting products,” he said. “Global pandemic-related
issues - worker absenteeism, short-term shutdowns due to parts shortages,
difficulties in filling open positions and overseas supply chain problems - continue
to limit manufacturing growth potential. However, panel sentiment remains
strongly optimistic, with four positive growth comments for every cautious
comment. Panelists are fully focused on supply chain issues in order to respond
to the ongoing high levels of demand.”
Fiore
also said that the past relationship between the PMI and the overall economy
indicated that the PMI for October (60.8 percent) corresponds to a 5-percent
increase in real gross domestic product (GDP) on an annualized basis.