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Manufacturing activity increases slightly in October

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Manufacturing activity increases slightly in October

Mixed results show new orders up, but production and employment down.

Economic activity in the manufacturing sector expanded in October for the fifth consecutive month, and the overall economy grew for the 53rd consecutive month, according to the nation's supply executives in the latest Manufacturing ISM Report On Business®.  The overall PMI increased 0.2 percentage point to 56.4% from September to October.

New orders increased slightly in October, while production decreased by 1.8 percentage points to 60.8%. The employment index fell by 2.2 percentage points to end at 53.2%.

"The top-line PMI of 56.4% exceeded expectations, which estimated that the October reading would come in at 55%."

Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee, indicated that the mixed results still suggest reasonable expansion in the near term.

"The past relationship between the PMI and the overall economy indicates that the average PMI for January through October (53.3%) corresponds to a 3.5% increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for October (56.4 percent) is annualized, it corresponds to a 4.4 percent increase in real GDP annually."

The top-line PMI of 56.4% exceeded expectations, which estimated that the October reading would come in at 55%.

Panel members were ambivalent as to the impact of October’s government shut-down and debt ceiling fight in Washington, with most indicating that the standoffs had, at most, minimal and short-term impacts.  However, a growing unease with government dysfunction was seen as hampering future growth.

 

 

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