U.S. Manufacturing Takes a Dip in October, Says ISM
October sees a sharp decline in U.S. manufacturing sector, reflecting challenges faced by the industry. Get insights on the latest ISM report.
The manufacturing sector in the U.S. faced a tough time in October after showing some signs of getting better in the past few months. This happened because new orders and jobs went down. This was probably because of strikes by the United Auto Workers (UAW) against the major car companies in Detroit.
The Institute for Supply Management (ISM) said that its manufacturing PMI fell to 46.7 last month from 49.0 in September. It was the highest reading since November 2022. But, this is the 12th month in a row that the PMI stayed below 50. When it's below 50, it means manufacturing is not doing well. This is the longest time this has happened since the Great Recession from 2007-2009.
Economists thought the index would stay the same at 49.0. The UAW strikes at car factories owned by major companies had a big impact on the PMI. These strikes caused problems in the supply chains and led to some workers being furloughed or laid off.
The car companies have made some agreements with the UAW. This could lead to the PMI going up again in November.
Even though manufacturing is having a hard time because of higher borrowing costs, the PMI might be making it seem worse than it is. Data from the Federal Reserve last month showed that making long-lasting goods in the third quarter went up fast. But, making things that don't last as long went down.
The ISM survey's new orders sub-index, which looks at orders in the future, fell from 49.2 in September to 45.5 last month. Factories are still making things, but not as much. The production index fell from 52.5 in September to 50.4 last month.
Backlog orders didn't change much and were still low. Also, factories didn't have a lot of things in stock, which is a good sign for the future.
Prices for things factories need were not going up a lot. The prices paid by factories went up a bit, but not by much. This was probably because of small delays in getting materials from suppliers.
The measure of how fast suppliers were delivering things went up a bit. A number below 50 means deliveries are getting faster.
Jobs in factories went down after getting better in September. The measure for factory jobs went from 51.2 to 46.8. But, this measure doesn't always show well how many jobs there will be in the government's big report on jobs. The UAW strikes probably made fewer jobs in October.
The government's report last week said that at least 30,000 UAW members were on strike when they counted for October's jobs report.
Economists think that factory jobs went down by 10,000 last month after going up by 17,000 in September. This could make the total number of jobs go down from 336,000 in September to 180,000 in October. The government will say what really happened in October's jobs report on Friday.