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An employee works at Pioneer Pipe in Marietta Ohio

US Manufacturing Expands at Modest Pace as Orders Cool

Nov. 1, 2016
ISM index bumps up from 51.5 in September to 51.9 in October, just ahead of the median forecast and another month of growth, however slim.

America’s factories barely expanded last month as faster production cushioned a slowdown in orders that signals a plodding manufacturing sector.

The Institute for Supply Management’s index rose to 51.9 in October from 51.5 the previous month, figures from the Tempe, Arizona-based group showed Tuesday. The median forecast in a Bloomberg survey called for 51.7. A reading above 50, of course, signals expansion.

A third-quarter moderation in consumer demand, weak global markets and limited investment by U.S. businesses have kept orders subdued. While companies have made some progress in trimming bloated inventories, manufacturing has gained little traction after shrinking two months earlier.

“The factory sector has essentially been treading water,” Omair Sharif, senior U.S. economist at Societe Generale in New York, said before the report. “The worst is behind us, but prospects for a big pickup are quite low.”

The ISM index has averaged 51 so far this year, little changed from 51.3 in 2015, when manufacturing was its weakest in the current expansion. The ISM new orders gauge fell to 52.1 in October from 55.1 the prior month, while a measure of production rose to 54.6 from 52.8. The index of export orders was little changed at 52.5 after 52.

The measure of orders waiting to be filled declined from 49.5 to 45.5, matching the lowest since January and indicating production may slow in coming months.

A gauge of factory employment rebounded to 52.9, the first expansion in four months and the highest reading since June 2015.

The measure of factory inventories decreased to 47.5, the lowest since May, from 49.5, while the index for customer stockpiles dropped to 49.5 from 53. The report also showed the index of prices paid rose to a three-month high of 54.5 from 53.

By Shobhana Chandra

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