U.S. Manufacturing Index Unexpectedly Edges Lower In October

(RTTNews) - Manufacturing activity in the U.S. unexpectedly contracted at a slightly faster rate in the month of October, according to a report released by the Institute for Supply Management on Monday.

The ISM said its manufacturing PMI slipped to 48.7 in October after edging up to 49.1 in September, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 49.5.

The unexpected dip by the headline index came amid a downturn by production, as the production index slid to 48.2 in October from 51.0 in September.

Meanwhile, the report said the new orders index crept up to 49.4 in October in 48.9 in September, and the backlog of orders index rose to 47.9 in October from 46.2 in September.

The ISM said the employment index also inched up to 46.0 in October from 45.3 in September, although the reading below 50 still indicates a decrease in employment in the manufacturing sector.

"A chain reaction of one-month index improvements started with New Orders in August and flowed to Production in September," said Susan Spence, Chair of the ISM Manufacturing Business Survey Committee. "In October, it manifested in a 1.7-percentage point increase in the Backlog of Orders Index."

She added, "These short gains have not appeared to translate into sustained growth for the sector, a reflection of continuing economic uncertainty."

On the inflation front, the report said the prices index fell to 58.0 in October from 61.9 in September, indicating a slowdown in the pace of price growth.

The ISM is scheduled to release a separate report on service sector in the month of October on Wednesday. The services PMI is expected to rise to 51.0 in October from 50.0 in September, with a reading above 50 indicating growth.