October PMI Lowest Since May 2013

The October PMI is the lowest reading since May 2013, when the PMI also registered 50.1 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

“The October PMI® registered 50.1 percent, a decrease of 0.1 percentage point from the September reading of 50.2 percent. The New Orders Index registered 52.9 percent, an increase of 2.8 percentage points from the reading of 50.1 percent in September. The Production Index registered 52.9 percent, 1.1 percentage points above the September reading of 51.8 percent.

A PMI® above 43.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the October PMI® indicates growth for the 77th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 34th consecutive month. Holcomb stated, “The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through October (52 percent) corresponds to a 2.8 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI® for October (50.1 percent) is annualized, it corresponds to a 2.2 percent increase in real GDP annually.”

According to the report, Fabricated Metal products  reported growth in October. Markets reporting contraction — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Petroleum & Coal Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Machinery; Transportation Equipment; Wood Products; and Computer & Electronic Products.

ISMOct2015

The September 2015 PMPA Business Trends Report Sales Index came in at 121, stronger than expected, (even with September 2014 and still up 3.3% YTD over CY 2014 average.)

Our 3.3 % correlates nicely with the PMI’s 2.8% estimate for GDP growth as well.

Link to October ISM PMI

Link to PMPA September Business Trends

Graph Courtesy Calculated Risk Blog

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