US manufacturing said to be in a 'sustainable recovery'

02 November 2009 19:05  [Source: ICIS news]

WASHINGTON (ICIS news)--US manufacturers had expanded activity in October for the third consecutive month, the Institute for Supply Management (ISM) said on Monday, declaring that the nation’s manufacturing sector “is in a sustainable recovery mode”.

The institute said that its closely watched purchasing managers index (PMI) rose to 55.7% in October from a reading of 52.6% in September.

Along with the 52.9% improvement reported for the PMI in August, the measure has indicated growth in the manufacturing sector for three consecutive months - a sequence generally seen as indicating a recovery.

The broad US manufacturing industry is a crucial downstream consuming sector for chemicals and plastics.

Norbert Ore, chairman of the institute’s manufacturing business survey committee, noted that the October PMI reading of 55.7% is the highest since April 2006 when the index was at 56%.

A PMI reading of 50% or higher indicates that the manufacturing industry is in expansion. A reading below 50% means that the sector is contracting.

The PMI has seen general improvement over the last 10 months, rising almost every month from the December 2008 low point of 32.9%.

The index is based on a survey of purchasing managers in 18 key manufacturing industries, including chemicals and plastics, with questions on their new orders, production, employment and other measures.

Ore said that the gain seen in October’s PMI was particularly significant because it also reflects improvements for manufacturing employment.

“The jump in the PMI was driven by production and employment, with both registering significant gains,” Ore said.

“Production appears to be benefitting from continuing strength in new orders, while the improvement in employment is due to some call-backs and opportunities for temporary workers,” he said.

“Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode,” he added.

In October, 13 of the 18 surveyed industries reported growth, said Ore.  Along with gains for chemicals and plastics, advances also were reported for petroleum and coal products, apparel, leather, furniture, computers and electronics, transportation equipment, machinery, food and beverage, printing, fabricated metal, electrical equipment, appliances and paper.

Only non-metallic minerals, primary metals and wood products reported contraction in October.

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