US manufacturing drops to 15-month low in October
WASHINGTON (Reuters) – U.S. manufacturing activity slumped to a 15-month low in October and factories faced higher prices for inputs.
The Institute for Supply Management (ISM) said on Friday its manufacturing PMI fell to 46.5 last month, the lowest level since July 2023, from 47.2 in September. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.3% of the economy.
The decline in the PMI could be reflecting a strike by factory workers at planemaker Boeing (NYSE:BA), which has halted the production of its best-selling 737 MAX as well as 767 and 777 wide-body programs. The labor strife contributed to depressing industrial production in September.
October marked the seventh consecutive month that the PMI remained below the 50 threshold, but above the 42.5 level that the ISM said over time generally indicates an expansion of the overall economy. The survey has, however, exaggerated the weakness in manufacturing. Goods spending increased at its fastest pace in 1-1/2 years in the third quarter.
Goods spending has held up despite higher borrowing costs and could rise further now that the Federal Reserve has started cutting interest rates.
The ISM survey’s forward-looking new orders sub-index increased to 47.1 last month from 46.1 in September. But output contracted further, likely because of the Boeing strike, which has had ripple effects on its suppliers. The production index fell to 46.2 from 49.8 in September.
The survey’s measure of prices paid by manufacturers jumped to 54.8 from 48.3 in September, which was the lowest level since December 2023. Its gauge of supplier deliveries dipped to 52.0 from 52.2 in the prior month. A reading above 50 indicates slower deliveries.
Factory employment improved slightly, though it remained at depressed levels. The survey’s manufacturing employment measure rose to 44.4 from 43.9 in September.
