WASHINGTON, D.C.: The US manufacturing sector, under pressure from the strong dollar that makes exports more costly, continued to grow in October but just barely, a private survey showed on Monday (Tuesday in Manila).
The Institute for Supply Management’s purchasing managers index fell to 50.1 in October, the lowest reading since May 2013, from 50.2 in September.
That marked the fourth straight month of declines in PMI, bringing it almost to the 50 dividing line between growth and contraction.
Manufacturing has been a long-running weak spot in the US economy, which is dominated by the services sector.
The October PMI number was slightly better than the flat reading expected, and details of the report revealed some positive signs.
There was a pick-up in growth in new orders, with the index jumping 2.8 points to 52.9. Production also grew at a faster pace.
But employment contracted sharply and the backlog of orders continued to shrink. New export orders fell for the fifth month in a row.
“The turnaround in manufacturing will be gradual and take time as the appreciation in the US dollar and weakness in the global economy will continue to weigh on orders and production,” said Ryan Sweet of Moody’s Analytics.
Sweet noted that the October reading is below the 2015 year-to-date average of 52 and the 2014 average of 55.7.
“It’s premature to declare manufacturing as stabilizing, but the economy doesn’t need to lean heavily on it as a source of growth,” he said, pointing out the sector accounts for only 12 percent of gross domestic product growth.
Respondents in the ISM survey indicated concern about the strong dollar. “Currency exchange is having a large impact on business results,” said one manager in the chemical products sector.
Another worry was the continuing low price of oil, which has led energy companies to scale back production, pushing a slowdown in related industries.
“Energy market continues to struggle. Effects are beginning to bleed into other areas,” said a respondent in the computer and electronic products industry.