US Manufacturing Pace Quickens

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 Management’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 that’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 that’s prompted cutbacks in equipment purchases.

“Manufacturing as a whole appears to be trying to regain momentum,” Bradley Holcomb, chairman of the ISM survey, said on a conference call with reporters. Still, the report and comments from purchasers “suggest a lukewarm environment for demand. The global economy is still fragile.”

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 & Poor’s 500 Index rising 1 percent to 1,426.3 at 10:40 a.m. in New York.

The ISM’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


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell