Activity in the U.S. manufacturing sector saw a slight expansion in the month of October, according to a report released by the Institute for Supply Management on Monday.
The ISM said its purchasing managers index edged down to 50.1 in October from 50.2 in September, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to dip to 50.0.
Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, “Comments from the panel reflect concern over the high price of the dollar and the continuing low price of oil, mixed with cautious optimism about steady to increasing demand in several industries.”
The modest drop by the headline index partly reflected a downturn in employment in the manufacturing sector, as the employment index dropped to 47.6 in October from 50.5 in September.
On the other hand, the report said the new orders index climbed to 52.9 in October from 50.1 in September, and the production index rose to 52.9 from 51.8.
The report also said the prices index inched up to 39.0 in October from 38.0 in the previous month, but the reading below 50 indicates lower raw materials prices for the 12th straight month.
“Having stabilized around 50, the manufacturing sector is hovering between contraction or recovery,” said Jay Morelock, an economist at FTN Financial. “Whether or not we head up or down from here will be dependent on a combination of global growth prospects and Federal Reserve accommodation.”
He added, “For now, stabilizing in positive territory (albeit slightly) is better than many alternatives imagined when energy prices reversed in July and August.”
On Wednesday, the ISM is scheduled to release a separate report on activity in the service sector in the month of October. The service sector index is expected to dip to 59.7 from 56.9 in September.
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