ISM Report: Contraction in Manufacturing Hits Consecutive One-Year Mark

By SBE Council at 1 November, 2023, 10:16 pm

by Raymond J. Keating –

According to the Institute for Supply Management’s purchasing manager’s report, manufacturing woes in October hit the one-year mark.

The Manufacturing PMI registered 46.7 percent in October. That was down by 2.3 percentage points from the September level, and marked the 12^th consecutive month of contraction in manufacturing. A measure below 50 percent means that manufacturing is generally declining.

The following chart from the ISM report shows where the PMI has been over the past year.

According to Timothy R. Fiore, chair of the Institute for Supply Management’s Manufacturing Business Survey Committee, a manufacturing PMI above 48.7 percent points to growth in the overall economy. Therefore, Fiore said, “The overall economy dropped back into contraction after one month of weak expansion preceded by nine months of contraction and a 30-month period of expansion before that.”

These PMI numbers do generally line up with manufacturing production data from the Fed’s industrial production report, which has been down since October of last year.

Finally, as SBE Council has noted before, manufacturing in the U.S. overwhelmingly is about small business, with 93.1 percent of employer firms (according to the latest Census Bureau) in manufacturing having fewer than 100 employees.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.