U.S. Manufacturing Activity Loses Steam in OctoberPosted by IndustryNet on Thursday, November 2, 2023
Following a strong September, U.S. manufacturing activity lost steam in October, with the index for overall business conditions declining to 46.7% and marking the sector’s 12th consecutive month of contraction. U.S. Manufacturing Activity Decelerates: The DetailsThe ISM report is based on a survey of purchasing and supply executives from 18 different manufacturing industries, who provide data on various indicators such as new orders, production, employment, supplier deliveries, inventories, prices, backlog of orders, new export orders and imports. This month’s report finds the index of manufacturing activity declined 2.3% to a reading of 46.7%. (A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction). The ISM finds the overall index was dragged down by lower demand, employment, and backlogs. Let’s take a closer look. In October: • New Orders remained in contraction, down 3.7% to a reading of 45.5%. Other vital metrics pointed to a downward trajectory: • Production fell 2.1% to a contractionary reading of 50.4. Notably, however, the metric is still in expansion. Some bright spots from the report finds: • Supplier Deliveries increased, rising 1.3% to 47.7%--still in contraction, but an improvement overSeptember. Said Timothy Fiore, Chairman of the ISM, “Demand remains soft, but production execution is stable compared to September as panelists’ companies continue to manage outputs, material inputs and — more aggressively — labor costs. Suppliers continue to have capacity. Seventy-five percent of manufacturing gross domestic product (GDP) contracted in October, up from 71 percent in September. More importantly, the share of sector GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 37 percent in October, compared to 6 percent in September and 15 percent in August. Three of the top seven industries by contribution to manufacturing GDP fell into this category,” Of the 18 industries surveyed by the ISM, just two sectors: food, beverage & tobacco products and plastic and rubber products, registered growth. Industries showing the sharpest declines included printing & related support activities; textile mills; electrical equipment, appliances, and components; and fabricated metals. Related: How Outsourced Prospecting Can Help Your Manufacturing Business Survive an Uncertain Economy What Manufacturers Are Saying About Business ConditionsManufacturers from diverse industries provided insights in this month's report, reflecting a general consensus that the economy is slowing down, with concerns ranging from the UAW strike to inflationary pressures and market uncertainty. “Markets remain tough and we have focused more resources on sales and marketing to drive greater sales and new market penetration with our devices,” said one respondent in the computer & electronic products industry. “Lots of leadership focus on what we can do in the near term that will also support long-term company goals.” Another respondent in the chemical products sector said, “Economy is absolutely slowing down. Less optimism regarding the first quarter of 2024.” While another in the fabricated metal products industry had this to say, ““A slow fourth quarter, and we’re clearly in a mild industry recession. However, demand is down less than 5 percent, and customer confidence of a recovery in the second half of 2024 is solid. Supplier deliveries are stable, and suppliers are seeking more work. But they’re not yet willing to adjust prices to compete for it.” But despite the waning optimism from some industries, others were more upbeat. “Business is decent — not great, but steady and solid,” said one executive in the furniture and fixtures sector. “We are meeting our sales and margin goals, but it’s definitely hard to guess the future.” While another in Primary Metals stated, ““Despite the ongoing United Auto Workers (UAW) strike, there’s a firmness and pickup in orders for the rest of the fourth quarter.” Find & Attract New Business in the Industrial WorldAt MNI, Our goal is to help your business thrive, so whether you’re looking to advertise your products and services to manufacturers, needing to find new suppliers, or need to reach out to decision-makers in the manufacturing world, our industrial solutions are here to support your mission
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