US Manufacturing Shrinks For Eighth Month On Sluggish Demand
Daniel CarterSummary:
US factory activity shrank in October for an eighth straight month, driven by a pullback in production and tepid demand.
The Institute for Supply Management's manufacturing index eased 0.4 point to 48.7, according to data released Monday. Readings below 50 indicate contraction, and the measure has been stuck in a narrow range for most of this year.
The group's production index slid 2.8 points to 48.2, marking the second month in the last three that output has contracted. The weakness is keeping headcounts depressed. The ISM's employment gauge shrank for a ninth straight month, albeit at a slightly slower pace than in September.
Meanwhile, inflationary pressures continued to ease. The index of prices paid for raw materials fell 3.9 points to 58, the lowest since the start of the year. Since a recent peak in April, during the height of the tariffs rollout, the price gauge has dropped nearly 12 points.
Economists and policymakers are relying more on private reports such as the ISM survey for clues on the economy and job market in the absence of official data because of the US government shutdown. Friday's scheduled employment report is also poised to be delayed as a result.
A dozen manufacturing industries contracted in October, led by textiles, apparel and furniture. Six industries, including primary metals and transportation equipment, reported growth.
The survey illustrates general malaise among the nation's manufacturers who are contending with lingering uncertainty around trade policy. Producers are navigating evolving supply chains as they source materials. The ISM measure of supplier deliveries rose to a four-month high, indicating longer lead times.
Bookings shrank for a second month in October, though at a slower pace, the ISM report showed. Order backlogs, another indicator of demand, also contracted.
Inventories at manufacturers shrank by the most in a year. Customers' stockpiles also remained low, suggesting some scope for orders to pick up and support production.
Source: Bloomberg Europe
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