US manufacturing grows in Oct, offsetting slower Sept pace

01 November 2010 16:01  [Source: ICIS news]

WASHINGTON (ICIS)--The US manufacturing sector showed improved performance in October, a key production industry survey said on Monday, offsetting a September downturn but still below the pace of manufacturing expansion seen earlier this year.

The Institute for Supply Management (ISM) said that its closely watched purchasing managers index (PMI) rose to 56.9% in October, a gain from the 54.4% PMI recorded for September.

Although the index has been bouncing up and down since its recent highpoint of 60.4% in April, it has remained above the 50% level, indicating that the nation’s manufacturing industries continue to expand, although more slowly than in the first quarter this year.

The purchasing managers index is comprised of ten subsidiary measures of activity in 18 manufacturing sectors. A reading of 50% or higher indicates that manufacturing is expanding, while an index below that midpoint means that the sector is contracting.

After its recent high-water mark of 60.4% in April, the index had fallen to 55.5% in July, rose to 56.4 in August and then tilted down again in September.

“Since hitting a peak in April, the trend for manufacturing has been toward slower growth,” said Norbert Ore, chairman of the institute’s survey committee.

“However, this month’s report signals a continuation of the recovery that began 15 months ago, and its strength raises expectations for growth in the balance of the quarter,” Ore said.

He noted that despite the cooling pace of manufacturing expansion, the sector was growing.

“With 14 of 18 industries reporting growth in October, manufacturing continues to outperform the other sectors of the economy,” Ore said.

Among the 14 manufacturing industries reporting expansion in October were chemicals products and plastic and rubber production.

One of the unidentified chemical sector survey respondents told the institute that “Business is slowing down, but it is still double digits over last year”.

In the ten subsidiary measures that make up the PMI composite, the institute noted especially strong gains in new orders, production and exports.

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