US manufacturing contracted for an eighth straight month in October

Sponsored by

Shake the (cap) table. Pulley is cap table management that works for you. They’re changing the game with ready-made reports and built-in compliance that can accelerate daily work.

US manufacturing activity shrank for an eighth straight month in October, due to slumps in both production and inventories, according to the latest sector index from the Institute for Supply Management (ISM).

ISM’s purchasing managers index (PMI) came in at 48.7% last month, slightly lower than September’s reading of 49.1%. An index reading below 50% indicates a contraction in the manufacturing sector. Economists that Reuters polled had predicted a slight improvement in the PMI, to 49.5%, but the government shutdown “has caused a government economic data blackout,” Reuters reported.

It was “contractions in production and inventories” that were responsible for “the 0.4-percentage point decrease of the manufacturing PMI” over the previous month, Susan Spence, chair of the ISM’s Manufacturing Business Survey Committee, said in a news release. ISM’s production index decreased 2.8 percentage points from September, to 48.2%. Its inventories index of 45.8% was down 1.9 percentage points.

All four of ISM’s demand indicators—new orders, exports, order backlogs, and customer inventories—improved, but were “still in contraction territory” last month, according to Spence.

Positive pricing news. ISM’s prices index reading of 58% showed that manufacturers generally paid more for materials last month, albeit at a slower rate than the 61.9% reading in September. Sectors that reported paying higher raw-materials prices included apparel, appliances, computer and electronics products, furniture, and food and beverage products, among others.

Thomas Ryan, North American economist at Capital Economics, wrote in a note that the prices index decrease was “the most encouraging aspect of the report,” Bloomberg reported. Ryan added that the reading hit “its lowest level since tariffs were imposed,” and it “indicates the worst of the tariff-driven pressure on manufacturers’ input costs is likely behind us.”