(Nov 2): US manufacturing activity picked up in October, supported by the strongest production growth in nearly five years.

The Institute for Supply Management’s manufacturing index rose one point to 55.5 in October, the second-highest reading in more than four years. The measure topped all but one forecast in a Bloomberg survey of economists. Figures above 50 indicate expansion.

The production gauge notched its best reading since late 2021, data out Monday showed. A measure of new orders, a sign of demand, was the highest since July and remained well within expansionary territory.

ISM’s manufacturing gauge has now pointed to growth for 10 consecutive months, reversing a roughly three-year slump for the sector.

The sustained pickup has encouraged manufacturers to hire more workers. Factory headcount increased in October for a fourth month, the longest such stretch since early 2022.

Factories are benefitting from strong economic growth, resilient consumer demand and solid business investment. The US economy expanded in the third quarter at the fastest pace in a year, bolstered by business outlays on data centres and artificial intelligence, as well as industrial and other equipment.

Twelve industry groups reported growth in October, including electrical equipment, machinery and computer and electronic products. The three industries reporting contraction were printing, paper and non-metallic minerals.

Manufacturers in recent years have also had to contend with high inflation and supply-chain disruptions amid tariffs and the Iran war. The Federal Reserve’s preferred measure of inflation rose 3.6% from a year earlier in September, well above the central bank’s 2% goal.

ISM’s report showed that factories in October once again faced elevated prices for raw materials and longer lead times on supplier deliveries. ISM’s prices gauge fell to 75.2, down from the prior month but still higher than before the Middle East conflict began.

 Uploaded by Magessan Varatharaja