New Orders, Production, Backlog of Orders and Employment Continue Growing
Supplier Deliveries Slowing at Slower Rate
Raw Materials’ Inventories Contracting, Customers’ Inventories Too Low
Prices Increasing at Slower Rate

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in October, and the overall economy grew for the 101st consecutive month, say the nation's supply executives in the latest Manufacturing ISM^® Report On Business^®.

The report was issued by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee: "The October PMI^® registered 58.7 percent, a decrease of 2.1 percentage points from the September reading of 60.8 percent. The New Orders Index registered 63.4 percent, a decrease of 1.2 percentage points from the September reading of 64.6 percent. The Production Index registered 61 percent, a 1.2 percentage point decrease compared to the September reading of 62.2 percent. The Employment Index registered 59.8 percent, a decrease of 0.5 percentage point from the September reading of 60.3 percent. The Supplier Deliveries Index registered 61.4 percent, a 3 percentage point decrease from the September reading of 64.4 percent. The Inventories Index registered 48 percent, a decrease of 4.5 percentage points from the September reading of 52.5 percent. The Prices Index registered 68.5 percent in October, a 3 percentage point decrease from the September level of 71.5, indicating higher raw materials prices for the 20th consecutive month. Comments from the panel reflect expanding business conditions, with new orders, production, employment, order backlogs and export orders all continuing to grow in October, supplier deliveries continuing to slow (improving) and inventories contracting during the period. Prices continue to remain under pressure. The Customers’ Inventories Index remains at low levels."

Of the 18 manufacturing industries, 16 reported growth in October, in the following order: Paper Products; Nonmetallic Mineral Products; Machinery; Transportation Equipment; Wood Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Plastics & Rubber Products; Textile Mills; Chemical Products; Computer & Electronic Products; Fabricated Metal Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; and Primary Metals. Two industries reported the same level of activity as September.

WHAT RESPONDENTS ARE SAYING ...

• "Raw material costs on the rise, but purchasing operation has navigated shortages caused by hurricanes." (Chemical Products)
• "Incoming orders are strong, mainly due to recovery efforts in the wake of Hurricanes Harvey and Irma. Backlogs are up due to operating inefficiencies." (Machinery)
• "Hurricanes have caused shortages in the resin market, resulting in price increases, inventory constraints and increased lead times." (Computer & Electronic Products)
• "Ongoing market growth. Minimal impact expected from hurricanes so far in this season." (Miscellaneous Manufacturing)
• "Business seems to be a bit depressed due to the storms last month, but is picking back up." (Fabricated Metal Products)
• "Business continues to be better than expected." (Transportation Equipment)
• "Business is good. Supplier deliveries have extended. Things are really picking up." (Food, Beverage & Tobacco Products)
• "Our plants are sold out for 2017 — we can’t take any new orders." (Nonmetallic Mineral Products)
• "In plastics processing, Hurricane Harvey is the reason for every price increase being announced—and virtually all suppliers are announcing price increases." (Plastics & Rubber Products)