The Institute of Supply Management (ISM) reported that the Purchasing Managers’ Index (PMI) fell to 58.7 in October from 60.8 in September. September was the highest PMI since May 2004. So far every month of 2017 has had a higher index than any month of 2016. After contracting in August 2016, the manufacturing sector has expanded at a strong pace. PMI came in below expectations (59.5). The New Order Index decreases by 1.2 points to 63.4. The Production Index fell by 1.2 points to 61.0. Of 18 manufacturing industries, 16 reported monthly growth in October, and the other two had no change.
After a slow start in January of 2014, PMI recovered, with a range of 54.3 to 58.1 for the balance of 2014. We did not see a reading above 53.9 in 2015, and that high mark was reached in January. In 2016, the index ranged from 48.2 (Jan) to 54.5 (Dec) but it was not a steady rise, with manufacturing contracting in February and August.
An index over 50 indicates growth while a PMI under 50 represents contraction in the manufacturing sector of the economy. The index reached a low of 32.5 in December 2008 but then recovered more quickly than most other areas of the economy.