US Economy
Two PMI reports give contrasting trends on US manufacturing
By Michael Hennigan, Finfacts founder and editor
Nov 3, 2014 - 4:25 PM

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Two PMI reports track contrasting trends on US manufacturing activity in October.

The Institute of Supply Management (ISM) report says the October PMI (purchasing managers index) registered 59, an increase of 2.4 percentage points from September’s reading of 56.6 - 50 is the no-change point. Meanwhile, Markit said the seasonally adjusted final Markit US manufacturing PMI posted 55.9 in October, to  remain well above the neutral 50.0 threshold.  However, the headline index dropped from 57.5 in September and signalled the slowest overall.

The ISM said the New Orders Index registered 65.8, an increase of 5.8 percentage points from the 60 reading in September, indicating growth in new orders for the 17th consecutive month. The Production Index registered 64.8, 0.2 percentage point above the September reading of 64.6.

Of the 18 manufacturing industries, ISM said 16 are reporting growth in October in the following order: Plastics & Rubber Products; Textile Mills; Fabricated Metal Products; Miscellaneous Manufacturing; Primary Metals; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Chemical Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Transportation Equipment; Furniture & Related Products; Paper Products; Machinery; and Computer & Electronic Products. The only industry reporting contraction in October is Petroleum & Coal Products.

Markit said October data highlighted a slowdown in the ongoing US manufacturing sector recovery, with output and  new business growth both moderating during the latest survey period. Manufacturers pointed to a weaker contribution from export sales in October, but job creation remained resilient. Meanwhile, input cost inflation was the weakest since April and factory gate charges rose at a slower pace.

Weaker new business growth was the main factor  weighing on the headline PMI in October. Although still strong in the context of the survey history, the latest expansion of new orders was the least marked since January (when sales were suppressed by adverse weather conditions). Softer new business growth in part reflected a subdued contribution from export sales. Latest data highlighted only a marginal rise in new work from abroad, and the rate of expansion was the slowest for three months.

Output growth moderated to a seven-month low in October, but was still stronger than the post-crisis trend. Weaker new business gains also contributed to the slowest increase in backlogs of work across the manufacturing sector since January.

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