The U.S. manufacturing sector grew at its weakest pace for a year in October, according to the Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™), which is based on approximately 85% of usual monthly survey replies. The flash PMI index registered 51.1, down from 52.8 in September, and was consistent with only a modest rate of expansion.
The principal factor behind the lower headline PMI index was a drop in manufacturing output, which fell for the first time in over four years during October. Although the decline in production was only slight, it was in sharp contrast to the solid increases seen in previous months.
A number of manufacturers linked lower levels of output to a weaker trend for new orders. Incoming new work increased modestly in October, but at the slowest rate in six months. The easing in the rate of total new order growth generally reflected weaker domestic demand, according to panellists. New export orders increased over the month, but the rise was marginal and followed a similarly sized reduction in September.
Meanwhile, employment in the manufacturing sector increased for the fourth consecutive month in October. A number of firms linked additional hiring to new product developments. Nonetheless, the rate of job creation remained only modest, despite having accelerated slightly since September.
Inflationary pressures picked up in October, with manufacturers reporting higher prices for raw materials, particularly steel, over the month. Overall, the rate of input price inflation was the fastest since July.
Firms increasingly passed on greater costs to clients by raising their factory gate prices. Output charges rose at the strongest pace in eight months as a result.
The quantity of inputs bought by manufacturing companies fell during October. The decline was the first since December 2010, and occurred alongside a depletion of stocks of purchases. Meanwhile, greater activity at vendors contributed to a further lengthening of suppliers’ delivery times. Moreover, the latest deterioration in vendor performance was the greatest for a year-and-a-half.