ISM PMI Increases in October, But Currency Dampening Outlook
"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. Survey respondents note the recovery in autos, computers and exports as key drivers of this growth. Concerns about inventory growth are lessened by the improvement in new orders during October. With 14 of 18 industries reporting growth in October, manufacturing continues to outperform the other sectors of the economy," said Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee.
Of the 18 industries surveyed, 14 reported growth last month, including petroleum and coal products, electrical equipment, food and beverage, plastics and rubber, and fabricated metals. Nonmetallic mineral products and furniture and related goods reported business contractions.
Currency was a concern of several industry respondents. "The dollar is weakening again, which is resulting in higher costs for our materials we purchase overseas. It is hurting our profit margins," said a respondent from the transportation equipment industry. "Currency continues to wreak havoc with commodity pricing," noted a respondent from the food and beverage sector.
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