Manufacturing activity in the U.S. unexpectedly contracted at a faster rate in the month of October, according to a report released by the Institute for Supply Management on Wednesday.
The ISM said its manufacturing PMI fell to 46.7 in October from 49.0 in September, with a reading below 50 indicating a contraction. Economists had expected the index to come in unchanged compared to the previous month.
The unexpected decrease by the headline index partly reflected an accelerated contraction in new orders, as the new orders index slumped to 45.5 in October from 49.2 in September.
The production index also slid to 50.4 in October from 52.5 in September, indicating a slowdown in the pace of growth.
The report also showed a downturn in employment in the manufacturing sector, with the employment index tumbling to 46.8 in October from 51.2 in September.
Meanwhile, the ISM said the prices index rose to 45.1 in October from 43.8 in September, although the reading below 50 signifies continuing overall price reductions in spite of energy market turbulence.
“Demand remains soft, but production execution is stable compared to September as panelists’ companies continue to manage outputs, material inputs and – more aggressively – labor costs,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.
On Friday, the ISM is scheduled to release a separate report on U.S. service sector activity in the month of October.
While the ISM’s services PMI is expected to edge down to 53.0 in October from 53.6 in September, a reading above 50 would still indicate growth.