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ISM production index October 2019



A man using an angle grinder on a piece of steel at a metal manufacturing company on August 7, 2018 in Orange County, New York.

Waring Abbott | Getty Images

A survey of US industry showed that the sector continued to contract in October, the third straight month of decline amid uncertainty in global trade.

The Procurement Industry Index from the Institute for Supply Management came in at 48.3% last month, compared with a reading of 47.8% in September. But that was below the economists' expectations of 49.1

%. A figure below 50% represents a contraction in the industry.

The sector showed its first contraction in a few years in August, ending a 35-month expansion period where the PMI averaged 56.5%, according to ER M. The production meter had its lowest reading since June 2009 in September as exports plunged amid the escalated trade war.

The continued contraction showed the challenging environment U.S. manufacturers face amid the escalating trade war between the United States and China. Production was once considered a big winner during the Trump administration, with improvements in employment and activity over the past few years.

"Comments from the panel reflect an improvement from last month, but the sentiment is still more cautious than optimistic," Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said in a statement.

The production index was only 46.2% in October, compared with the September reading of 47.3%. The order backlog was 44.1%, contracting for the sixth straight month, compared to the September reading of 45.1%, according to ISM.

Prices fell for the fifth consecutive month and at a faster rate with the price index recorded 45.5% in October.

"Inputs – expressed as supply deliveries, inventories and imports – were again lower in October, mainly due to contraction of supplier deliveries offset by improvements in inventories," Fiore said.

However, the latest report also showed signs of recovery, causing some on Wall Street to believe that production declines will not accelerate. New orders, employment and inventories showed improvement last month.

"The outlook for the nation's factories is not getting worse, and the production recession is not intensifying," said Chris Rupkey, chief financial officer at MUFG, in a note. "There are even some green shoots for the manufacturing sector, as orders pick up and orders lead the way for production and production and jobs."


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