TEMPE, Ariz. – For the 12th consecutive month, the U.S. manufacturing sector has shrunk. The Institute for Supply Management measured the overall manufacturing sector at 46.7% in October, 2.3% lower than September and marking the 12th straight month the index has been in contraction. It’s now the longest stretch of contraction since the Great Recession.
“Demand remains soft, but production execution is stable compared with September as panelists’ companies continue to manage outputs, material inputs and — more aggressively — labor costs,” said Timothy R. Fiore, ISM chairman.
New orders contracted to a reading of 45.5%, 3.7% lower than recorded in September. Production slowed 2.1% to 50.4%, while the price index rose 1.3% to 45.1%. Any reading below 50 indicates overall contraction.
Just two of the 18 manufacturing industries recognized by the ISM reported growth in October: food and beverage, and plastic and rubber products.
“Seventy-five percent of manufacturing GDP contracted in October, up from 71% in September,” said Fiore. “More importantly, the share of sector GDP registering a composite index calculation at or below 45% — a good barometer of overall manufacturing weakness — was 37% in October, compared with 6% in September and 15% in August.”
Furniture fell for the third consecutive month. “Business is decent — not great, but steady and solid,” wrote one furniture respondent. “We are meeting our sales and margin goals, but it’s definitely hard to guess the future.”
Ten of the 18 manufacturing industries reported a dip in new orders, with furniture among them. Despite the new order dip, furniture reported no change in production and was one of just four to report no change in employment (10 reported a decline).
Furniture was one of 12 to report lower inventories. It was also one of nine to report paying lower prices for raw materials. Furniture reported no change in order backlog, as did the majority of the sector.