Manufacturing expanded in October as new orders, production and employment all improved, the Institute for Supply Management said today.
The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, rose to 59.3 percent, up strongly from September’s 55.4 percent. The October PMI was the highest since September 2018.
ISM said 15 of 18 industries reported economic expansion, including apparel, fabricated metal products, machinery, primary metals, transportation equipment and miscellaneous manufacturing. Only two industries, textiles and printing, reported economic contraction.
“The strength of the numbers is really strong,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call.
Fiore said the PMI represented a “demand-driven expansion. It continues to surprise me the strength of the new orders level.”
The PMI is viewed as a leading economic indicator and a barometer of where manufacturing is heading. The index is based on a survey of 350 purchasing and supply executives.
A PMI above 50 percent indicates an expanding manufacturing economy. An index reading below 50 percent shows contraction. The PMI has been above 50 percent for five consecutive months as manufacturing recovers from factory shutdowns earlier this year related to the COVID-19 pandemic. The PMI has averaged 50.7 percent the past 12 months.
The group’s New Orders Index surged to 67.9 percent last month, up from 60.2 percent in September. ISM said the October level for new orders was the highest since January 2004. Sixteen of 18 industries reported a gain in new orders. Only textiles reported a decrease.
The Production Index increased to 63 percent in October, up from 61 percent the month before. Eleven of 18 industries reported a boost in output. Only textiles reported a decline while six industries said there had been no gain in production.
ISM’s Employment Index crossed into positive territory last month at 53.2 percent, an improvement from 49.6 percent in September. The October level ended 14 months of contraction. The index reached a low of 27.5 percent in April at the peak of COVID-19 impact.
“Most respondents have been expanding their workforce,” Fiore said.