US manufacturing contracts for eighth straight month in Oct

Economic activity in the US manufacturing sector contracted in October this year for the eighth consecutive month, following a two-month expansion preceded by 26 straight months of contraction, the nation’s supply executives said in the latest manufacturing purchasing managers’ index (PMI) report released by the Institute for Supply Management (ISM) based in Tempe, Arizona.

The manufacturing PMI registered 48.7 per cent in October—a 0.4-percentage point (pp) decrease compared to 49.1 per cent in September.

Economic activity in US manufacturing contracted in October for the eighth month in a row, following a two-month expansion preceded by 26 straight months of contraction, the ISM manufacturing PMI report said.
Textile mills; apparel, leather & allied products; furniture & related products; petroleum & coal products; and chemical products were among the 12 sectors reporting contraction in October.

Textile mills; apparel, leather & allied products; furniture & related products; petroleum & coal products; and chemical products were among the 12 sectors reporting contraction in October.

“The overall economy continued in expansion for the 66th month after one month of contraction in April 2020,” said Susan Spence, chair of ISM’s manufacturing business survey committee.

A manufacturing PMI above 42.3 per cent, over a period of time, generally indicates an expansion of the overall economy.

The new orders index contracted for the second month in October following one month of growth; the figure of 49.4 per cent is 0.5 pp higher than the 48.9 per cent recorded in September.

The October reading of the production index (48.2 per cent) is 2.8 pps lower than September’s 51 per cent.

The prices index remained in expansion, registering 58 per cent, down by 3.9 pps compared to the 61.9 per cent in September.

The backlog of orders index registered 47.9 per cent, up by 1.7 pps compared to 46.2 per cent in September. The employment index registered 46 per cent, up by 0.7 pp from September’s 45.3 per cent.

“The supplier deliveries Index indicated slower delivery performance for the third consecutive month after one month in ‘faster’ territory, which was preceded by seven consecutive months in ‘slower’ territory. The reading of 54.2 per cent is up 1.6 percentage points from the 52.6 per cent recorded in September,” Spence noted.

The inventories index registered 45.8 per cent, down by 1.9 pps compared to September’s 47.7 per cent.

The new export orders index reading of 44.5 per cent is 1.5 pps higher than 43 per cent registered in September. The imports index registered 45.4 per cent, 0.7 pp higher than September’s reading of 44.7 per cent.

“In October, US manufacturing activity contracted at a faster rate, with contractions in production and inventories leading to the 0.4-percentage point decrease of the manufacturing PMI. A chain reaction of one-month index improvements started with new orders in August and flowed to production in September. In October, it manifested in a 1.7-percentage point increase in the backlog of orders index. These short gains have not appeared to translate into sustained growth for the sector, a reflection of continuing economic uncertainty,” Spence added.

Fibre2Fashion News Desk (DS)