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Growth in U.S. Manufacturing Eases From a 13-Year High

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Manufacturing remained solid in October even as expansion at U.S. factories cooled from a 13-year high a month earlier, figures from the Institute for Supply Management showed Wednesday.

Highlights of ISM Manufacturing (October)

  • Factory index eased to 58.7 (est. 59.5) from September’s 60.8; readings above 50 indicate expansion
  • Employment gauge cooled to 59.8 from 60.3
  • Measure of new orders dipped to 63.4 from 64.6
  • 16 of 18 industries reported growth in October, led by paper products, nonmetallic minerals and machinery

Key Takeaways

The ISM’s measure remained above the 57.1 average so far this year through September, consistent with a firming-up in the industry.

Growth in manufacturing has been steady for the better part of two years, fueled by consumer spending and business investment. Exports have also rebounded this year as companies take advantage of a weak U.S. dollar that’s made American goods more attractive to overseas customers.

In September, the ISM’s gauge was inflated by a surge in the supplier deliveries index, indicating longer lead times as producers scrambled to get back to normal operations following hurricanes Harvey and Irma. That measure fell in October while remaining well above its average from the first eight months of 2017.

The report also showed inventories of materials contracted in October, which “reflects the difficulty of the supply chain to deliver materials and services meeting production schedules,” Timothy Fiore, the ISM survey committee chairman, said in a release. Eleven industries reported smaller stockpiles for the month. Customer inventories also shrank.

Official’s View

“These are still very strong numbers,” Fiore said on a conference call with reporters. “My only real concern is the fact that the backlog is down.”

Other Details

  • ISM production measure cooled to 61 in October from 62.2
  • Backlog gauge fell to 55 from 58
  • Measure of export orders eased to 56.5 from 57
  • Gauge of supplier deliveries declined to 61.4 from 64.4
  • Index of prices paid dropped to 68.5 from 71.5
  • Factory inventories index decreased to 48 from 52.5

— With assistance by Alexandre Tanzi

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