The Institute for Supply Management’s closely-watched manufacturing report shows that conditions improved for manufacturers in October. Sizable gains in new orders, production and exports drove the overall Purchasing Managers Index (PMI) up from a 10-month low of 54.4 in September to 56.9 in October.
The PMI had declined for four of the prior five months. Today’s report should be viewed with some caution as just one month does not make a trend, and the PMI remains well below its recent peak of 60.4 reached in April.
A particularly welcome sign in today’s report is the sharp improvement in exports, which, after falling to an average of 55.5 in the third quarter, soared to 60.5 last month — close to the recent high of 62 attained in May.
Given the fact that last week’s report on GDP showed that export growth slowed in the third quarter, today’s report points to a possible pickup in export growth in the fourth quarter, which will be a shot in the arm for manufacturers.