Although the manufacturing sector of the U.S. economy grew for the twenty-ninth consecutive month in October, the pace was slower than in September. New orders, production and exports all slowed from their September levels and helped push the Institute for Supply Management's (ISM) closely watched manufacturing business activity index slightly lower to 59.1% last month. It was 59.4% in September, the highest the index has been in 2005.
An index figure above 50% indicates that the manufacturing sector generally is expanding; a figure below 50% signals that it is contracting.
"Rising prices, and energy costs in particular, are of major concern as manufacturers are struggling to control costs," says Norbert J. Ore, chair of ISM's manufacturing business survey committee. Indeed, prices manufacturers paid for diesel fuel, electricity, fuel oil, gasoline, and natural gas rose during October -- as did prices for aluminum, chemicals, copper, paper, plastics, steel and sugar. Between September and October, prices manufacturers paid to suppliers rose six percentage points at an index level of 84%.
During October, 70% of supply executives surveyed reported paying higher prices and just 2% reported lower prices; 28% said prices were unchanged from September.
ISM data are derived from a survey of purchasing and supply executives in more than 400 companies.