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US Manufacturing Index Shows Signs of Stabilizing

Oct. 24, 2019
Factory activity slightly increased in October despite apparent indications of a slowdown.

A gauge of U.S. factory activity unexpectedly improved in October for a second month, offering some hope that the manufacturing sector is stabilizing.

The IHS Markit manufacturing Purchasing Managers’ Index rose to 51.5 from a final September reading of 51.1, according to a preliminary October report issued Thursday that matched the highest estimate in Bloomberg’s survey of economists.

“If manufacturing can continue to gain momentum this should hopefully feed through to stronger jobs growth and an improved service sector performance, leading to better GDP growth,” said Chris Williamson, economist at IHS Markit.

Even with the improvement, manufacturing is likely to continue to weigh on the economy, amid a dimmer global growth outlook and trade tensions with China. Commerce Department figures earlier Thursday showed that orders placed with U.S. factories for business equipment declined for a second straight month and shipments matched the biggest drop since 2016.

A reading of 50 is the threshold between expansion and contraction.

In Japan, the PMI reading was the weakest in more than three years. A gauge of manufacturing in the euro area was unchanged from September at the lowest level since August 2012, while in Germany, the reading was little changed after shrinking in September by the most since June 2009.

Final October data are published on Nov. 1 for U.S. manufacturing and Nov. 5 for services and composite indicators.

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