October 2015 Manufacturing ISM Report On Business Reports that New Orders and Production Continue to Grow, but Employment Contracted

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected. Economic activity in the manufacturing sector expanded in October for the 34th consecutive month, and the overall economy grew for the 77th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing expanded in October as the PMI registered 50.1 percent, a decrease of 0.1 percentage point from the September reading of 50.2 percent, indicating growth in manufacturing for the 34th consecutive month. The October PMI is the lowest reading since May 2013, when the PMI also registered 50.1 percent.

ISM's New Orders Index registered 52.9 percent in October, an increase of 2.8 percentage points when compared to the September reading of 50.1 percent, indicating growth in new orders for the 35th consecutive month, and at a faster rate relative to September.

ISM's Production Index registered 52.9 percent in October, which is an increase of 1.1 percentage points when compared to the 51.8 percent reported in September, indicating growth in production for the 38th consecutive month.

ISM's Production Index registered 52.9 percent in October, which is an increase of 1.1 percentage points when compared to the 51.8 percent reported in September, indicating growth in production for the 38th consecutive month.

ISM's Employment Index registered 47.6 percent in October, which is a decrease of 2.9 percentage points when compared to the 50.5 percent reported in September, indicating contraction in employment following five consecutive months of growth. This month's employment reading is the lowest figure reported since August 2009 when the Employment Index registered 46.1 percent.

The delivery performance of suppliers to manufacturing organizations was slower in October as the Supplier Deliveries Index registered 50.4 percent, which is 0.2 percentage point higher than the 50.2 percent reported in September. This is the third month of slower supplier deliveries after two consecutive months of faster supplier deliveries.

The Inventories Index registered 46.5 percent in October, which is 2 percentage points lower than the September reading of 48.5 percent, indicating raw materials inventories are contracting in October for the fourth consecutive month.

The ISM Prices Index registered 39 percent in October, which is 1 percentage point higher than in September, indicating a decrease in raw materials prices for the 12th consecutive month. In October, 9 percent of respondents reported paying higher prices, 31 percent reported paying lower prices, and 60 percent of supply executives reported paying the same prices as in September.

ISM's Backlog of Orders Index registered 42.5 percent in October, an increase of 1 percentage point as compared to the September reading of 41.5 percent. Of the 88 percent of respondents who measure their backlog of orders, 13 percent reported greater backlogs, 28 percent reported smaller backlogs, and 59 percent reported no change from September.

Of the 18 manufacturing industries, seven are reporting growth in October in the following order: Printing & Related Support Activities; Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Chemical Products; Paper Products; and Fabricated Metal Products. The nine industries reporting contraction in October — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Petroleum & Coal Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Machinery; Transportation Equipment; Wood Products; and Computer & Electronic Products.

Keywords: Automation, Manufacturing, Process Industries, Discrete Industries, Supply Management, PMI, ISM, ARC Advisory Group.