PMI barely keeps its head above water in October
Manufacturing growth slowed to almost a compete stop in October as the Institute for Supply Management’s monthly Purchasing Managers’ Index (PMI) fell to its lowest level in 2 1/2 years.
The October PMI of 50.1% is just barely above the 50.0% growth threshold, and just one-tenth of a point lower than the 50.2% total in September. The index has steadily declined since a 53.5% reading in June 2015. The PMI is now at its lowest point since May 2013, when the PMI also was 50.1%.
Another month of decline would end a nearly three-year streak that the PMI has been above the 50.0% mark. However slight it was, October marked the 34th straight month with the PMI above break-even.
Declining oil prices got some of the blame for the slowing in manufacturing growth, but there were other factors as well. “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,” said Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee.
Just seven of the 18 industries surveyed by ISM showed growth in October, while nine industries, including metals, petroleum, plastics and rubber goods, appliances, machinery and electronics all were in decline.
Among the comments from committee members were:
- "Currency exchange is having a large impact on business results." (Chemical Products)
- "Energy market continues to struggle. Effects are beginning to bleed into other areas." (Computer & Electronic Products)
- "Business is improving. We still need young machinists to replace those retiring." (Fabricated Metal Products)
- "Business is picking-up in general." (Transportation Equipment)
- "Some level of slowing, but activity is acceptable." (Machinery)
- "Sales demand becoming more consistent. Beginning to see slightly more capital spending by key customers. Outlook more positive than negative." (Electrical Equipment, Appliances & Components)