For the seventh consecutive month and the 23rd time in the last two years, the manufacturing sector has contracted as reported on Nov 1.
ISM's Manufacturing PMI registered 46.5% in October, 0.7 percentage point lower compared to the 47.2% recorded in September. This is the lowest Manufacturing PMI reading in 2024.
However, the overall economy continued in expansion for the 54th month after one month of contraction in April 2020.
"Demand remains subdued, as companies continue to show an unwillingness to invest in capital and inventory due to concerns (for example, inflation resurgence) about federal monetary policy direction in light of the fiscal policies proposed by both major parties," saidTimothy R. Fiore, in a statement. "Suppliers continue to have capacity, with lead times improving and some shortages reappearing."
The Supplier Deliveries Index indicated slowing deliveries, registering 52% 0.2 percentage point lower than the 52.2% recorded in September.
Other index movements areas follows:
- The New Orders Index remained in contraction territory, registering 47.1%, 1 percentage point higher than the 46.1% recorded in September.
- The Production Index was at 46.2%, which is 3.6 percentage points lower than September’s figure of 49.8%.
- The Prices Index returned to expansion territory, registering 54.8% up 6.5 percentage points compared to the reading of 48.3% in September.
- The Backlog of Orders Index registered 42.3%, down 1.8 percentage points compared to the 44.1% recorded in September.
- The Employment Index registered 44.4%, up 0.5 percentage point from September’s figure of 43.9%.
- The New Export Orders Index reading of 45.5% is 0.2 percentage point higher than the 45.3% registered in September.
- The Imports Index remained in contraction territory in October, registering 48.3%, the same reading as reported in September.
What Repondents Are Saying
“Right-sizing continues. Contingency plans have been formulated to anticipate trade policies that will impose tariffs on key materials.” [Chemical Products]
“Market demand has significantly decreased in the second half of 2024 and is expected to be soft through the first quarter of 2025. Although inflation has stabilized and returned to historical levels, and interest rates are decreasing, there appears to be a general pessimism in the economy that is driving customers to be more restrictive in their capital expenditures, including investment in commercial vehicles. Uncertainty in the outcome of the upcoming election has resulted in several risk analysis studies to be prepared, particularly focused on the future of the electric vehicle (EV) migration and trade restrictions/penalties.” [Transportation Equipment]
“Heavy volumes for October have been extended into November to cover our record-breaking sales volume for this quarter.” [Food, Beverage & Tobacco Products]
“Business is picking up; outlook is optimistic, but not great.” [Computer & Electronic Products]
“Sales have been very slow the past six months. Interestingly, though, inquiries are up more than 30 percent from a year ago. This indicates there is pent-up demand, but customers are skittish about national and global economic conditions. We are hearing directly from customers that they need to order equipment to satisfy their requirements but are going to keep projects as long as possible before pulling the trigger.” [Machinery]
“Business levels remain depressed. It feels like a ‘wait and see’ environment regarding where the economy is heading; customers don't want to commit to inventory, which is resulting in lower order levels.” [Fabricated Metal Products]
“The potential port strike sent ripple effects through our industry. We have several large imports occurring in January, which created anxiety around critical components being delivered on time for a large, planned capital project. The three recent hurricanes missed large manufacturing hubs on the Gulf Coast but have still caused minor delays.” [Petroleum & Coal Products]
