PMI Falls To 56.8 Percent

Economic activity in the manufacturing sector grew in October for the 17th consecutive month, while the overall economy grew for the 36th consecutive month, according to the latest survey of purchasing managers by the Institute for Supply Management (ISM), Tempe, Ariz. ISM’s Purchasing Managers Index is 56.8 percent in October, a decrease of 1.7 percentage points when compared to 58.5 percent in September.

“Strong growth continues in the sector but at a slower rate than in September. New orders and production remain strong, and employment continues to expand. However, energy prices and commodity price inflation are major concerns for manufacturing buyers,” said Norbert J. Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia Pacific Corp.

Comments from respondents this month were typified by responses from the chemical industry indicating that demand for members’ products is strong, but profitability is being squeezed by energy prices.

“October continued a trend of slower growth, but that should be somewhat expected as manufacturing has experienced three quarters of strong growth so far this year. The decline in order backlogs is an indication that manufacturing has peaked, and some sectors are seeing this more than others. Concerns over recent inventory growth would seem to be offset by October’s decline in inventories and the expectations that customer inventories are still too low,” said Ore.