ISM Manufacturing PMI — October 2024
Headline: The Manufacturing PMI fell 0.7 point to 46.5, signaling contraction for the seventh consecutive month. October was a 6-month low, below the prior six-month average of 47.9 and the 46.8–49.2 range. Manufacturing remained below its 50.0 breakeven, although the broader economy was still growing, with its breakeven at 42.5.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo |
|---|---|---|---|---|---|
| New Orders | 47.1 | 46.1 | +1.0 | Contracting | above avg (47.0) |
| Production | 46.2 | 49.8 | -3.6 | Contracting | below avg (48.4) |
| Employment | 44.4 | 43.9 | +0.5 | Contracting | below avg (47.1) |
| Supplier Deliveries | 52.0 | 52.2 | -0.2 | Slowing | above avg (50.5) |
| Inventories | 42.6 | 43.9 | -1.3 | Contracting | 6-mo low |
| Customers' Inventories | 46.8 | 50.0 | -3.2 | Too Low | below avg (47.9) |
| Prices | 54.8 | 48.3 | +6.5 | Increasing | above avg (54.2) |
| Backlog of Orders | 42.3 | 44.1 | -1.8 | Contracting | below avg (43.2) |
| New Export Orders | 45.5 | 45.3 | +0.2 | Contracting | below avg (48.5) |
| Imports | 48.3 | 48.3 | 0.0 | Contracting | below avg (49.7) |
Key moves:
- Prices crossed back above 50, rising 6.5 points to 54.8, versus 48.3 in September and above its six-month average of 54.2.
- Inventories fell to a 6-month low of 42.6, while Production dropped 3.6 points to 46.2, its weakest reading since the six-month window began.
- Customers’ Inventories fell from 50.0 to 46.8, moving to “Too Low” and below its six-month average of 47.9.
Insights:
- The demand picture improved marginally but remained contractionary: New Orders rose to 47.1, above its six-month average, yet Backlog of Orders fell to 42.3 and has contracted for 25 months. The combination points to limited forward production visibility despite the better incoming-orders reading.
- The inventory signal is not an involuntary buildup: manufacturers’ Inventories contracted at 42.6 while New Orders were higher at 47.1. Coupled with customers’ inventories at a “Too Low” 46.8, the setup is potentially supportive of replenishment demand, though current production remained weak.
- Several readings improved month over month without exiting contraction: New Orders, Employment, and New Export Orders all rose but remained below 50. Employment at 44.4 still indicates net manufacturing job shedding.
- Supplier Deliveries at 52.0 indicate slower deliveries, a demand-positive or supply-tightness signal, but this was insufficient to offset weak production, orders backlogs, and employment.
- The rebound in Prices to 54.8 implies renewed input-cost pressure, creating a less favorable margin backdrop while goods inflation risks have increased.
Breadth & prices: Five industries reported growth—Apparel, Food/Beverage/Tobacco, Petroleum/Coal, Computer/Electronics, and Miscellaneous Manufacturing—and no industries were listed as contracting. Input prices increased, with the Prices index moving from 48.3 to 54.8.
Takeaway: October reinforced a prolonged manufacturing downturn: the headline PMI reached a 6-month low, production and employment remained deeply contractionary, and backlogs continued to erode. Low customer inventories and modestly firmer New Orders offer a possible replenishment channel, but the simultaneous rise in input prices complicates the outlook for margins and near-term policy-sensitive growth.