US manufacturing plummets to lowest level since 2020
U.S. manufacturing activity fell for the fourth month in a row while prices paid to manufacturers also decreased to the lowest level in more than two years.
The Institute for Supply Management’s October purchasing managers’ index came in at 50.2 percent, 0.7 percentage points lower than September and the lowest level since May 2020. The number indicates the manufacturing sector is nearly running flat.
The survey’s prices index fell 5.1 percentage points to 46.6 percent, also the lowest measurement since May 2020.
“The U.S. manufacturing sector continues to expand, but at the lowest rate since the coronavirus pandemic recovery began,” Timothy Fiore, chairman of the Institute for Supply Management, said in a statement. “With panelists reporting softening new order rates over the previous five months, the October index reading reflects companies’ preparing for potential future lower demand.”
The report comes amid concerns of global recession, as inflation remains high in many countries. The Federal Reserve is expected to announce a raise in interest rates this week of three-quarters of 1 percent, the fifth rate hike in a row. Rates are projected to hit 4.6 percent next year.
“Growing threat of recession is making many customers slow orders substantially,” one Institute for Supply Management survey respondent from the food, beverage and tobacco sector commented.
A respondent from the nonmetallic minerals sector said, “International conditions loom large and seem very foreboding. Overall, we still think 2023 will be a positive year, with at least some moderate growth.”
The survey also showed that job market pressures are continuing. The employment index registered 50 percent in October, 1.3 percentage points higher than the previous month.
“For those companies expanding their workforce, comments continue to support an improving hiring environment,” Fiore said.
The inventories index registered 52.5 percent, 3 percentage points lower than in September, and backlogs decreased by 5.6 percentage points.