The Institute for Supply Management reported that the manufacturing sector grew in October alongside the overall economy. The ISM’s Purchasing Managers' Index for manufacturing rose to 59.3%, up 3.4 points from September, marking the highest point for the PMI since September 2018.
The ISM’s indexes for new orders, production, backlog of orders, employment, supplier deliveries, inventories, prices, export and imports all rose compared to their September levels. The new orders index rose 7.7 points to 67.9%, the production index grew 2 points to 63%, inventories grew 4.8 points to 51.9%, and prices increased by 2.7 points to 65.5%. Customer inventories fell 1.2 points to 37.9%, its lowest point since June 2010, a level considered a positive for future production.
The overall PMI, new orders, and production indexes all increased at a faster rate, and each maintained growth for a fifth month running.
The index for manufacturing employment grew by 3.6 points, landing at 53.2%. The October results break a 14-month streak of contraction in manufacturing employment. Imports rose faster than exports: The index for imports in October was 58.1%, 4.1 points higher than it was in September, while the exports index rose 1.4 points to 55.7%.
Among industries, only two sectors reported contraction: textile mills and companies working with printing and related support activities. Manufacturers working with apparel and leather, fabricated metal products, nonmetallic mineral products, food and related products, plastics and rubber, machinery, furniture, paper, wood, chemical products, primary metals, computers and electronics, transportation equipment, electrical equipment, and miscellaneous manufacturers all reported growth. Surveyed manufacturing executives, in comments to the ISM’s survey, expressed optimism in sustained growth.
“Sales continue to be strong—up 4% this September compared to September 2019,” said one transportation equipment executive. “The year-to-date level is still 21% below last year due to the [COVID-19] shutdown, but sales are stronger than expected and forecast to stay strong through the first quarter of 2019,” they said.
An executive in the food and beverage industry reported that stores were “stocking up for the second wave of COVID-19,” resulting in increased production. A CEO working in machinery said business was “almost back to normal levels,” but said customers were still being cautious with capital spending.
