The report, generated from a survey of business executives, said the ISM’s Purchasing Manager’s Index dropped 0.7 points to 50.2%, indicating extremely slow growth in the overall manufacturing economy. According to the ISM, the manufacturing economy has grown every month since May 2020, but the growth seen in October was the slowest it has been since then.
In the report released November 1, Chair of the Institute’s Manufacturing Business Survey Committee Timothy Fiore said the results reflected manufacturers anticipating fewer orders.
“With panelists reporting softening new order rates over the previous five months, the October index reading reflects companies’ preparing for potential future lower demand,” said Fiore.
Despite the drop in the PMI, the ISM’s three primary indexes improved or remained flat. New orders continued to contract in October, but at a slower rate than before, improving by 2.1 points to land at 49.2%, less than a full percentage point away from growth. The production index grew by 1.7 points to continue to grow at 52.3%, and the employment index added 1.3 points to land at 50.0% exactly, indicating no change from the previous month.
Survey respondents saw customer demand slow amid concerns over a possible recession. “Growing threat of recession is making many customers slow orders substantially,” reported the executive of a food and beverage company. A different leader, from the electrical equipment and appliances industry, said a drop in the housing market was leading to adverse effects for their business.
“Customer demand has been slower for two months,” said a fabricated metal products executive. “Production is decreasing our inventory and we are implementing forecasts carefully. The headwind seems to be very strong, so we need to be prepared for that.”