US production falls to 15-month low amid rising commodity prices: ISM

WASHINGTON (Reuters) – U.S. manufacturing activity fell to a 15-month low in October and factories grappled with rising commodity prices, the Institute for Supply Management (ISM) said on Friday.

The ISM manufacturing PMI fell to 46.5 last month, the lowest level since July 2023, from 47.2 in September. A PMI reading below 50 indicates a contraction in the manufacturing sector, which accounts for 10.3% of the economy.

The decline in PMI may reflect a strike by workers at aircraft manufacturer Boeing.bachelor), which grounded production of its best-selling 737 MAX and its wide-body 767 and 777 models. Labor disputes contributed to the fall in industrial production in September.

October marked the seventh month in a row that the PMI remained below the 50 threshold but above the 42.5 level, which the ISM says typically indicates the broader economy is expanding over time. However, the study exaggerated the weakness of the manufacturing industry.

A measure of prices paid by producers jumped to 54.8 from 48.3 in September, the survey found, which was the lowest level since December 2023. The rate of deliveries to suppliers fell to 52.0 from 52.2 in the previous month. A reading above 50 indicates slower deliveries.

In the third quarter, spending on goods grew at its fastest pace in a year and a half, according to ISM. Spending on goods has held up despite higher borrowing costs and could rise further now that the Federal Reserve has begun cutting interest rates.

The ISM survey’s forward-looking new orders subindex increased to 47.1 last month from 46.1 in September. But production fell further, likely due to the Boeing strike, which has had a ripple effect on its suppliers. The production index fell to 46.2 from 49.8 in September.

Factory employment improved somewhat, although remained low. Manufacturing employment in the survey rose to 44.4 from 43.9 in September.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)