Posted by Joseph Y. Calhoun, III

The ISM manufacturing index rose in October:

October 2009 Manufacturing ISM Report On Business^®

PMI at 55.7%

New Orders, Production and Employment Growing

Inventories Contracting
Supplier Deliveries Slower

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in October for the third consecutive month, and the overall economy grew for the sixth consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business^®.

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “The manufacturing sector grew for the third consecutive month in October, and the rate of growth is the highest since April 2006 when the PMI registered 56 percent. The jump in the index was driven by production and employment, with both registering significant gains. Production appears to be benefiting from the continuing strength in new orders, while the improvement in employment is due to some callbacks and opportunities for temporary workers. Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode.”

PERFORMANCE BY INDUSTRY

In October, 13 of the 18 manufacturing industries reported growth. The industries — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Furniture & Related Products; Chemical Products; Computer & Electronic Products; Transportation Equipment; Plastics & Rubber Products; Machinery; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Fabricated Metal Products; Electrical Equipment, Appliances & Components; and Paper Products. The three industries reporting contraction in October are: Nonmetallic Mineral Products; Primary Metals; and Wood Products.

WHAT RESPONDENTS ARE SAYING …

• “We are beginning to be affected greatly by lead-time increases on semiconductor components.” (Computer & Electronic Products)
• “Still a very difficult environment — commodity increases threaten recovery and don’t seem to correlate with any supply/demand fundamentals.” (Food, Beverage & Tobacco Products)
• “Automotive demand still remains strong even after ‘cash for clunkers.’” (Fabricated Metal Products) [indicated for the second month]
• “After several rather busy months, we are seeing the order intake for early next year soften.” (Transportation Equipment)
• “The improvement seen earlier is not holding.” (Primary Metals)