The Institute for Supply Management (ISM) released its October 2010 "Report on Business" Monday that shows that manufacturing activity expanded in October at the fastest rate since May.
ISM's Business Survey Committee commented that "the manufacturing sector grew during October, with both new orders and production making significant gains. Since hitting a peak in April, the trend for manufacturing has been toward slower growth. However, this month's report signals a continuation of the recovery that began 15 months ago, and its strength raises expectations for growth in the balance of the quarter."
Of the 18 manufacturing industries, 14 are reporting growth in October including the fabricated metal products, machinery, and transportation equipment sectors. The manufacturing sector grew at an accelerated rate last month as the Purchasing Managers Index (PMI) registered 56.9 percent, an increase of 2.5 percentage points when compared to September's reading of 54.4 percent.
New orders also increased in the month, and ISM's New Orders Index registered 58.9 percent in October, which is an increase of 7.8 percentage points when compared to the 51.1 percent reported in September. This is the 16th consecutive month of growth in the New Orders Index and the largest month-over-month improvement since January 2009.
ISM's Production Index registered 62.7 percent in October, which is an increase of 6.2 percentage points from the September reading of 56.5 percent. This is the largest month-over-month improvement since January 2010.
ISM's Employment Index registered 57.7 percent in October, which is 1.2 percentage points higher than the 56.5 percent reported in September. This is the 11th consecutive month of growth in manufacturing employment. Ten of the 18 manufacturing industries reported growth in employment in October with fabricated metal products ranking eighth.
The ISM Prices Index registered 71 percent in October, 0.5 percent higher than the 70.5 percent reported in September. This is the 16th consecutive month the Prices Index has registered above 50 percent. What's most interesting is that "fabricated metal products" is the only industry reporting paying lower prices on average during October.
ISM's New Export Orders Index was 6 percentage points higher than the 54.5 percent reported in September. This is the 16th consecutive month of growth in the New Export Orders Index, while the Imports Index registered 51.5 percent, which is 5 percent lower than the 56.5 percentage points reported in September. This is the 14th consecutive month of growth in imports, as any number above 50 indicates growth.