U.S. ISM manufacturing index falls slightly more than expectations in October

The ISM manufacturing index in the U.S. dropped in the month of October. The index fell 2.1 points to 58.7. This is the fourteenth straight monthly expansion. Markets had expected a smaller drop to 59.5. All the components except customers’ inventories and imports lost some ground in the month. Notable falls were seen in inventories, supplier deliveries, prices, and order backlog.

The fall in new orders and inventories increases the spread between the two to 15.4. This remains in line with a view of manufacturing activity holding or strengthening in months ahead, noted TD Economics.

Out of 18 manufacturing industries, 16 recorded growth in October, with paper products, nonmetallic mineral products, and machinery registering the strongest advances. No industry saw a contraction in activity in October.

The important subcomponents impacted by hurricanes in August and September were greatly responsible for the pullback in October. Supplier inventories, prices, and, to a lesser extent, backlog of orders dropped after recording solid, hurricane-related advances in September. Survey participants’ comments imply that operations impacted by the hurricanes are rebounding on schedule.

Small declines in new orders, production and employment are likely more a reflection of monthly noise rather than the start of a new trend, stated TD Economics.

“Overall, this report remains consistent with a resilient and robust U.S. manufacturing sector supported by strong foreign demand that is helping to offset domestic policy uncertainty and U.S. dollar volatility”, added TD Economics.

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