The Institute for Supply Management (ISM) manufacturing index fell in October, suggesting it was approaching contraction territory. An orders index fell for the fourth time in five months and an input price index fell to its lowest level in over two years.
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Changes in the ISM index of general manufacturing activity (top) and in the new orders index (bottom)
Source: ISM
The CPI fell for the fourth time in five months. Several demand indicators, including new orders, have shown a contraction in activity and the order book index has reached its lowest level since mid-2020. The export orders index is in a zone of contraction for three consecutive months.
“The October index reflects companies’ readiness for a possible slowdown in demand,” Timothy Fiore, president of the ISM Manufacturing Research Commission, said in a statement.
The data is yet another reminder of growing fears of a global recession as major monetary authorities, including the United States, step up efforts to curb inflation.
In October, activity contracted in 10 manufacturing sectors. Furniture, wood products, paper products and textiles all experienced the biggest drops. On the other hand, the businesses expanded into eight sectors, including apparel, machinery and transportation.
In recent months, the prices of commodities such as oil and metals that traders use in their production activities have fallen. In October, the commodity purchase price index fell for seven consecutive months, reaching its lowest level since May 2020.
On the other hand, the order book decreased slightly due to the slowdown in demand. The late arrivals index fell to 46.8, the lowest level since March 2009, indicating shorter delivery times.
The employment index, which was in the contraction zone in the previous month, rose slightly to 50, marking the line between contraction and expansion. Restrictions on hiring by manufacturers, difficulties in securing skilled workers, or both may have played a role.
Inventories continued to rise in October, but the increase was the slowest since April.
See the table for detailed statistics.
Original title:US manufacturing is approaching stagnation, the price indicator at a two-year low(extract)
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