Purchasing Managers' Pessimism Tempers Q3 Growth

U.S. manufacturing continues to contract, according to the Purchasing Managers Index (PMI), despite gross domestic product (GDP) rebounding in the third quarter. PMI dropped to 48.3%, down 1.1 percentage points from September, according to the latest report from the National Assn. of Purchasing Management (NAPM). The trade group surveys purchasing executives on production, new orders, backlog of orders, deliveries, inventories, employment, imports, exports, and other topics. A PMI reading below 50% indicates manufacturing is "generally contracting," according to NAPM. "This is the fifth month of decline following 22 consecutive months of growth," says Norbert J. Ore, chairman of the NAPM Manufacturing Business Survey Committee and a director of corporate purchasing. "While production grew in October, the new orders index declined significantly and signals a continuing softness that could carry into the fourth quarter." The NAPM report, released Nov. 2, followed an Oct. 30 report from the U.S. Dept. of Commerce that GDP grew 3.3% for the July-Sept. quarter. GDP for the second quarter grew at 1.8%, dismal growth compared with 5.5% for the first quarter of this year. Some analysts were expecting third-quarter growth to remain below 3%.