Manufacturing expands for tenth straight month

U.S. manufacturing expanded for the 10th consecutive month in October, according to the latest ISM Manufacturing PMI Report. The Manufacturing PMI registered 55.5 percent, up 1 percentage point from September’s 54.5 percent. The overall economy has grown for 24 months straight, as a reading above 47.5 percent typically indicates economic expansion.

The New Orders Index grew for the 10th straight month at 55.5 percent. The Production Index jumped to 59 percent, a 2.3-point increase from September and the highest since November 2021. The Prices Index, while still in expansion territory, fell to 75.2 percent from 77.9 percent.

Backlog of Orders decreased to 54.6 percent from 56.4 percent. The Employment Index fell slightly to 52.4 percent from 52.7 percent. “U.S. manufacturing activity remained in expansion territory,” said Susan Spence, MBA, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.

Manufacturing Sentiment and Key Concerns

General sentiment worsened for a third month. The ratio of positive to negative comments was 1-to-2. Pricing volatility was mentioned in 62 percent of negative comments, followed by longer lead times at 41 percent and tariffs at 25 percent. The Iran conflict was cited in 21 percent of negative remarks.

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Three of four demand indicators remained in expansion. The Customers’ Inventories Index stayed in “too low” territory, which is usually positive for future production. The Production Index improved its positive-to-negative comment ratio to 2-to-1 in October.

Industry-Specific Performance

Of the six largest manufacturing industries, five expanded. These included Machinery; Computer & Electronic Products; Transportation Equipment; Chemical Products; and Food, Beverage & Tobacco Products. Twelve industries reported growth in total.

Wood products showed mixed results. Employment and raw material prices reported growth. Furniture & related products reported growth. Industries reporting contraction in October were Printing & Related Support Activities; Paper Products; and Nonmetallic Mineral Products. Six percent of manufacturing GDP contracted in October, up from 2 percent in September. Six percent of manufacturing GDP was in strong contraction, defined as a PMI of 45 percent or lower.