Economy
ISM: US Manufacturing Still Easing in October
Written by David Schollaert
November 1, 2022
US manufacturing activity grew at its slowest pace since May 2020, nearly falling in October to the neutral 50.0 mark — the level that typically divides expansion from contraction, according to the Institute for Supply Management (ISM). The latest update was slightly ahead of consensus forecasts of a neutral reading amid rising borrowing costs and continued inflationary pressures.
October’s manufacturing result was slowed as new orders remained in contraction territory, while prices also contracted — falling 5.1 percentage points month-on-month (MoM) to their lowest level in two and a half years.
The ISM’s report focused on the steady decline in the number of people quitting their jobs. The important gauge of wage growth fell for the second straight month, representing weakening wage inflation pressure.
October’s Manufacturing PMI fell to 50.2%, down from 50.9% in September, to the lowest reading since May 2020 when the pandemic recovery began. The latest reading, though down for the second straight month, marked the 29th consecutive month of expansion, as any index reading above 50% indicates expansion in the manufacturing sector.
“The US manufacturing sector continues to expand, but at the lowest rate since the pandemic recovery began,” said Timothy Fiore, chairman of ISM’s Manufacturing Business Survey Committee. “Like in September, mentions of large-scale layoffs were absent from panelists’ comments, indicating companies are confident of near-term demand. As a result, managing medium-term head counts and supply chain inventories remain primary goals.”
Fiore added that the backlog of orders declined, indicating that “buyers and sellers will begin to shore up order books and order streams to reduce share loss in the medium-to-long term.”
Eight manufacturing industries, including apparel, leather and allied products, machinery, transportation equipment, electrical equipment, and appliances and components reported growth. Furniture and related products, as well as textile mill and wood products, were among the seven industries reporting a contraction.
The report’s forward-looking new orders sub-index remained in contraction territory in October despite increasing to a reading of 49.2, up from 47.1 the month prior. It was the fourth time this year that the index has contracted.
An interactive history ISM Manufacturing Report on Business PMI index is available on our website. If you need assistance logging into or navigating the website, please contact us at info@SteelMarketUpdate.com.
By David Schollaert, David@SteelMarketUpdate.com
David Schollaert
Read more from David SchollaertLatest in Economy
ISM: Manufacturing growth slows in July, hits 10-month low
US manufacturing activity slowed again in July to a 10-month low
CRU: Pushing EU imports back to 15% would be a big task
Several EU member states have published a ‘non-paper’ that puts forward proposals for a post-safeguard trade measure.
SMU Community Chat: Tariff-induced panic purchases, inflation, and calculating costs
Chief executive of the Institute for Supply Management (ISM), Tom Derry highlighted how reactive buying behavior has shifted the market into a quiet demand period. Derry presented ISM data during the weekly SMU community chat.
Architecture billings still sluggish despite project inquiry uptick
The Architecture Billings Index (ABI), a leading indicator for non-residential construction activity, declined for an eighth straight month in June.
Beige Book: Tariff pressures mount, flat outlook
All districts reported “experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction.”