Manufacturing in the U.S. expanded in October at a faster pace than projected as orders and production picked up, showing the industry is stabilizing.
The Institute for Supply Managementâ€™s factory index climbed to 51.7 last month, the highest since May, from 51.5 in September, the Tempe, Arizona, group reported today. Economists estimated 51 for October, according to the median estimate in a Bloomberg survey. A reading of 50 is the dividing line between growth and contraction.
The report shows American factories are holding up amid a global economic slowdown thatâ€™s weakened manufacturing from Asia to Europe. At the same time, companies such as Cummins Inc. (CMI) are feeling the effects of the so-called fiscal cliff thatâ€™s prompted cutbacks in equipment purchases.
â€œManufacturing as a whole appears to be trying to regain momentum,â€ Bradley Holcomb, chairman of the ISM survey, said on a conference call with reporters. Still, the report and comments from purchasers â€œsuggest a lukewarm environment for demand. The global economy is still fragile.â€
Estimates ranged from 49.2 to 52.5 in the Bloomberg survey of 88 economists. An ISM reading above 42.5 generally is consistent with an expanding overall economy. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.
Stocks climbed after the figures, with the Standard & Poorâ€™s 500 Index rising 1 percent to 1,426.3 at 10:40 a.m. in New York.
The ISMâ€™s production index increased to a five-month high of 52.4 in October from 49.5 in September. The new orders measure climbed to 54.2, also the highest since May, from 52.3
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