TEMPE, Ariz. — Economic activity in the manufacturing sector contracted in October for the eighth consecutive month, following a two-month expansion preceded by 26 straight months of contraction, say the nation's supply executives in the latest ISM Manufacturing PMI Report.

The report was issued by Susan Spence, MBA, Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.

"The Manufacturing PMI registered 48.7 percent in October, a 0.4-percentage point decrease compared to the reading of 49.1 percent recorded in September. The overall economy continued in expansion for the 66th month after one month of contraction in April 2020. (A Manufacturing PMI above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index contracted for the second month in October following one month of growth; the figure of 49.4 percent is 0.5 percentage point higher than the 48.9 percent recorded in September. The October reading of the Production Index (48.2 percent) is 2.8 percentage points lower than September's figure of 51 percent. The Prices Index remained in expansion (or 'increasing' territory), registering 58 percent, down 3.9 percentage points compared to the reading of 61.9 percent reported in September. The Backlog of Orders Index registered 47.9 percent, up 1.7 percentage points compared to the 46.2 percent recorded in September. The Employment Index registered 46 percent, up 0.7 percentage point from September's figure of 45.3 percent.

"Tariffs continue to be a large impact to our business. The products we import are not readily manufactured in the U.S., so attempts to reshore have been unsuccessful," says a Machinery industry respondent to the report. "Overall, prices on all products have gone up, some significantly. We are trying to keep up with the wild fluctuations and pass along what costs we can to our customers." 

"Looking at the manufacturing economy, 58 percent of the sector's gross domestic product (GDP) contracted in October, down from 67 percent in September, however; the percent of GDP in strong contraction (registering a composite PMI® of 45 percent or lower), is at 41 percent, up 13 percent from September. The share of sector GDP with a PMI® at or below 45 percent is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, only two (Food, Beverage & Tobacco Products; and Transportation Equipment) expanded in October," says Spence.

The six manufacturing industries reporting growth in October — listed in order — are: Primary Metals; Food, Beverage & Tobacco Products; Transportation Equipment; Plastics & Rubber Products; Fabricated Metal Products; and Nonmetallic Mineral Products. The 12 industries reporting contraction in October — in the following order — are: Textile Mills; Apparel, Leather & Allied Products; Furniture & Related Products; Paper Products; Printing & Related Support Activities; Wood Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Chemical Products; Machinery; Miscellaneous Manufacturing; and Computer & Electronic Products.

Wood Products only reported a growth in New Export Orders, while a decline all other categories. Furniture & Related Products reported a dip in all categories. 

To read the full report, visit ismworld.org.