- U.S Manufacturing PMI reported at 48.3% in October, marking contraction for 3rd consecutive month.
- Global trade uncertainties and economic slowdown highlighted as the reasons behind contraction.
- Indices for production and prices printed a decline as compared to figures for September.
- New orders, inventories, and employment marked the only segments with positive outlook.
Institute of Supply Management (ISM) posted the U.S Manufacturing Purchasing Manager’s Index (PMI) for October at 14:00 GMT on Friday. According to the report, U.S Manufacturing PMI continued contraction for the third month in a row. The worse than expected figure has been largely associated with the ongoing slowdown of the U.S economy and more widely, the global trade uncertainties, as per economists.
U.S Manufacturing PMI Reported At 48.3% In October
The U.S Manufacturing PMI has been reported at 48.3% for the month of October. While the figure shows improvement as compared to September, when it came out to be lower at 47.8%, it has still failed to beat analysts’ forecast of 49.1% for the last month. Generally, a figure below 50% for this gauge that provides an insight into the U.S manufacturing, is construed as contraction.
Following the report, financial experts further remarked that General Motors’ strike that spanned over the entire month of October may have weighed down the index.
ISM also added that the U.S economy had printed expansion in manufacturing PMI for 35 consecutive months, prior to August 2019. PMI for the expansion period held its ground at 56.5% (average). Owing to the U.S – China trade complications, manufacturing PMI took the steepest dive in September 2019 (47.8%), when it marked the lowest level since June 2009.
The continued contraction is a measure of how the trade conflicts between the two superpowers of the world are posing a threat to the U.S manufacturers. According to experts, with declining unemployment rates and upbeat economic activity, manufacturing has always come out as a strong suit for the Trump administration. The past three months, however, have hinted at the government losing the battle in its home ground.
Chairman, Timothy Fiore, of the ISM Manufacturing Business Survey Committee, in a statement, after the release of the report, commented:
“Comments from the panel reflect an improvement from the prior month, but sentiment remains more cautious than optimistic”.
Other Noticeable Figures Of Interest For Forex Trader
Other noticeable figures highlighted in the report include a further contraction in the production index from September’s 47.3% reading to 46.2% in October. The backlog of orders index dropped consecutively for the sixth month and was noted at 44.1% versus a relatively higher 45.1% reading for September. As per the prices index, prices decreased at a greater pace in October and were posted at 45.5%, that marked the fifth straight month for the index’s uninterrupted decline.
The elements of improvement accentuated by the U.S manufacturing PMI for October included new orders, inventories, and employment. The positive outlook in such segments has made the Wall Street hopeful of an approaching end to the slowdown.