US manufacturing grows in Oct, but pace slackens - ISM

01 November 2011 15:31  [Source: ICIS news]

WASHINGTON (ICIS)--The US manufacturing sector continued to expand in October, the Institute for Supply Management (ISM) said on Tuesday, but the pace of growth has slowed again and is near the tipping point into contraction.

The institute said that its closely watched purchasing managers index (PMI) dropped to 50.8% for October, a marginal decline from September’s reading of 51.6%.

But October’s PMI is the lowest measure since August when it was at 50.6% and marks an ongoing reduced pace of manufacturing growth compared with readings at and above 60% seen in the first quarter this year.

The PMI is a composite of supplier responses to the ISM’s monthly survey of 10 different business performance measures in 18 major manufacturing sectors.

A PMI reading above 50% indicates the US manufacturing sector is expanding, while an index measure below 50% means production is contracting.

The PMI has been above 51% for 24 of the 27 months since the end of the recession in June 2009, including a recent peak of 61.4% in February this year.  

But since February the PMI generally has been in decline, although it inched back to 51.6% in September before the new marginal drop in October.

However, despite the slower pace of the overall PMI last month, the institute noted that a key component of that measure, the new orders index, rose by 2.8 percentage points from September to October’s reading of 52.4%.

That gain brought an end to what had been three months of worrisome contraction in the new orders index.

Among the 18 manufacturing industries tracked by the institute, only eight reported growth in October, according to the report, and four others were flat with September.

Six manufacturing sectors reported contraction for last month, including plastics/rubber products and chemicals.

An unidentified plastics industry officials responding to the institute’s survey said that “Business is slowing, not crashing, but uncertainty and caution are the order of the day”.

($1 = €0.72)

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By: Joe Kamalick
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