Manufacturing ISM Flirts With Contraction Third Month, Employment Shifts to Contraction

Economists who looked at last month's barely above contraction report and predicted the same results this month were nearly spot on.

Last month the Manufacturing ISM was 50.2, this month the Bloomberg Consensus was 50.0, and the report came in at 50.1.

For a third straight month, the ISM is skirting near contraction, at 50.1 in October vs 50.2 and 51.1 in the prior two months.

New orders are showing some life, up nearly 2 points to a 52.9 reading that is safely above breakeven 50. Production is also at 52.9. But other readings are not as a favorable. Backlog orders remain in deep contraction at 42.5 while employment, for the first time in six months, is also in contraction, down nearly 3 points to 47.6. Exports have been the difference this year for the factory sector and new export orders in this report, at 47.5, remain below 50 for the fifth straight month. Prices, at 39.0, extended their long run of contraction.

ISM October 2012-Present



That was the lowest reading since May of 2013. Let's investigate all the details of today's report straight from the Institute for Supply Management Manufacturing ISM® Report On Business® released this morning.

Index	Oct	Sep	PP Change	Direction	Rate of Change	Trend in Months
PMI®	50.1	50.2	-0.1	Growing	Slower	34
New Orders	52.9	50.1	+2.8	Growing	Faster	35
Production	52.9	51.8	+1.1	Growing	Faster	38
Employment	47.6	50.5	-2.9	Contracting	From Growing	1
Supplier Deliveries	50.4	50.2	+0.2	Slowing	Faster	3
Inventories	46.5	48.5	-2.0	Contracting	Faster	4
Customers' Inventories	51.0	54.5	-3.5	Too High	Slower	3
Prices	39.0	38.0	+1.0	Decreasing	Slower	12
Backlog of Orders	42.5	41.5	+1.0	Contracting	Slower	5
Exports	47.5	46.5	+1.0	Contracting	Slower	5
Imports	47.0	50.5	-3.5	Contracting	From Growing	1

Key Points

• Backlog of orders are in contraction
• Growth in new orders barely positive
• Exports contracting for the fifth month
• Prices have plunged 

There's nothing in the ISM report to make the Fed want to hike, but the Fed will do what they want.

For an interesting alternative to today's ISM numbers please see Gardner Business Index Shows Small to Medium Sized Businesses Struggling Most.

Mike "Mish" Shedlock