US MANUFACTURING SECTOR EXPANDS IN OCTOBER, GOOD NEWS FOR EMPLOYMENT

Nov 18, 2020

The US manufacturing sector expanded in October, according to the Institute for Supply Management’s “Manufacturing ISM Report on Business.” There was good news in the report for manufacturing employment as well, with the employment index entering expansion territory for the first time in more than a year.

“Manufacturing performed well for the third straight month, with demand, consumption and inputs registering growth indicative of a normal expansion cycle,” said Timothy Fiore, chair of the institute’s Manufacturing Business Survey Committee. “While certain industry sectors are experiencing difficulties that will continue in the near term, the overall manufacturing community continues to exceed expectations.”

ISM’s Manufacturing PMI rose to a reading of 59.3% in October, up from 55.4% in September. October’s reading was the highest since September 2018. October’s reading also indicated the overall economy expanded for the sixth month in a row after contracting in April. Readings above 42.8%, over time, indicate expansion in the overall economy.

The PMI is based on the diffusion indexes of five indexes with equal weights: new orders, production, employment, supplier deliveries and inventories. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive). Four of the five indexes are seasonally adjusted, with inventories being the exception.

The report’s diffusion index of employment in manufacturing entered expansion territory for the first time since July 2019. The employment index rose to a level of 53.2% in October from 49.6% in September. An employment index reading above 50.8%, over time, is generally consistent with an increase in employment.

Source: Staffing Industry Analysts

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