United States PMI October 2019

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United States: ISM manufacturing index improves but remains in contractionary territory in October

November 1, 2019

The Institute for Supply Management (ISM) manufacturing index rose to 48.3 in October from 47.8 in September; however, the index undershot market expectations of 49.3 and remained below the 50-threshold that separates contraction from expansion in the sector.

The improvement was the result of a weaker contraction in new orders, which were boosted by a recovery in new export orders. Moreover, job losses also slowed in October. On the other hand, output fell at a sharper pace, which fed through to a faster decline in manufacturers’ backlogs of work, while stocks of inventory continued to decline, but at a softer rate.

On the supply side, supplier delivery times shortened in October for the first time in over three years and few respondents mentioned supply chain constraints or shortages. Meanwhile, customers’ inventories contracted at a slower rate and input cost inflation fell due to lower raw material prices.

Comments from the panel suggest manufacturers will continue to face tough operating conditions in the months ahead. One respondent noted that “customer demand is down, and we are expecting a very soft fourth quarter, without much relief in sight for Q1”, while another panelist commented that the “economy is showing slight signs of weakening. The same business headwinds on trade, tariffs, and currency uncertainty are making the environment challenging.”

FocusEconomics Consensus Forecast panelists expect industrial production to increase 0.8% in 2020, which is unchanged from last month’s forecast. In 2021, panelists see industrial production rising 1.6%.

Author:, Economist

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United States PMI Chart

United States PMI October 2019 0

Note: Composite index in the Manufacturing Report on Business (PMI). Readings above 50% indicate an expansion in the manufacturing sector while readings below 50% point to a contraction.
Source: Institute for Supply Management.

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