We got an updated look into the health of America's manufacturing sector on Monday morning.
It was better than expected.
There were two releases:
- Markit Economics' purchasing manager's index (PMI) for October was 54.1, a six-month high. Economists had forecast a reading of 54, unchanged from the previous print.
- And, the Institute of Supply Management's PMI was 50.1. The consensus forecast was 50, right on the border between expansion and contraction. Economists at Deutsche Bank and Wells Fargo had forecast a drop below 50.
"It looks as though the downshift in manufacturing activity may be coming to an end," wrote Pantheon Macroeconomics' Ian Shepherdson in a client note about the ISM report.
The ISM said new orders rose to a three-month high, while inventories fell, and employment collapsed to a six-year low.
"That's grim, but employment tends to lag orders so we're hopeful this will mark the low, at least until the seasonal factors become much less favorable early next year," Shepherdson wrote.
Markit's Chris Williamson said in the release, "Stronger manufacturing growth in October brings encouraging news after the sector saw the pace of expansion slump to a two-year low in the third quarter."
The report said new export sales continued to rise slowly because the strong dollar remained a headwind. Employment recovered from a 27-month low, after more workload increased the amount of unfinished work there was.
And, lower commodity prices, especially for steel and other metals, helped manufacturers. "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 ISM report said.
