U.S. Manufacturing Beats Forecasts as Production Accelerates

U.S. manufacturing expanded faster than expected in October as production grew at its strongest pace in nearly five years and input-price pressures eased. The Institute for Supply Management said Monday its manufacturing purchasing managers index rose to 55.5 from 54.5 in September, the second-highest reading in more than four years. The result topped all but one forecast in a Bloomberg survey of economists. Readings above 50 indicate expansion. Manufacturing has now expanded for 10 consecutive months. The production index climbed 2.3 points to 59, its highest reading since November 2021. New orders rose to 55.5 from 55.3, the strongest reading since July and a tenth consecutive month of growth. Manufacturers reported some relief from rising costs. ISM’s prices index fell 2.7 points to 75.2, indicating that input-price increases were less widespread than in September, although the reading remained elevated. Hiring continued to expand. The employment index registered 52.4, down slightly from September’s 52.7 but above 50 for a fourth consecutive month. That marked the longest stretch of manufacturing employment growth since early 2022. The expansion extended across much of the sector. Twelve industries reported growth, including electrical equipment, machinery, computer and electronic products, primary metals and transportation equipment. Three industries reported contraction: printing, paper and nonmetallic mineral products. Five of the six largest manufacturing industries expanded. Manufacturers’ inventories returned to growth, with that index rising to 51.4 from 48.6. Customers’ inventories remained at a level ISM considers too low, a condition that can support future production as customers replenish supplies. Export orders also improved, rising to 51.2 from 50.9, while the imports index increased to 52.9 from 51.