The manufacturing activity The US economy plummeted to its lowest level in 15 months in October and factories faced higher input prices.
The Institute for Supply Management (ISM) said on Friday that its PMI manufacturer fell to 46.5 last month, the lowest since July 2023, from 47.2 in September. A PMI reading below 50 indicates contraction in the manufacturing sector, which represents about 10.3% of the economy.
The decline in the PMI could be due to the workers strike from the aircraft manufacturer Boeingwhich has halted production of its best-selling 737 MAX, as well as the 767 and 777 widebody programs. Labor conflicts helped depress industrial production in September.
October was the seventh consecutive month that the PMI remained below the 50 threshold, but above the 42.5 level that the ISM says typically indicates an expansion in the overall economy. However, the survey has exaggerated the weakness of the manufacturing sector. Spending on goods rose at its fastest pace in 1½ years in the third quarter.
Spending on goods has held up despite higher borrowing costs and could rise even further now that the Federal Reserve has begun to cut rates of interest.
The ISM prospective new orders subindex rose to 47.1 last month from 46.1 in September. But production contracted even more, probably because of the Boeing strike, which has had an impact on its suppliers. The production index fell to 46.2 from 49.8 in September.
The index of prices paid by manufacturers rose to 54.8 from 48.3 in September, which was the lowest level since December 2023. The indicator of supplier deliveries fell to 52.0 from 52.2 the previous month . A reading above 50 indicates a slowdown in deliveries.
Factory employment improved slightly, although it remained at low levels. The manufacturing employment indicator rose to 44.4 from 43.9 in September.
