Manufacturing PMI Falls to Match October 2016 Low

The US manufacturing purchasing managers’ index matched a two-and-a-half-year low last month as new orders fell as trade tensions continued to wear on sentiment in the sector.

The manufacturing PMI came in at 51.7%, down from 52.1% reported in May, and matching the lowest level since October 2016 even as the measure still showed growth by staying above 50%, the Institute for Supply Management said on Monday. The consensus on Econoday was for a reading of 51.1%.

“Respondents expressed concern about US-China trade turbulence, potential Mexico trade actions and the global economy,” said Timothy Fiore, chair of the ISM’s manufacturing business survey committee. “Overall, sentiment this month is evenly mixed.”

The new orders index fell 2.7 percentage points to 50% while production rose 2.8 points to 54.1% last month.

“Customer demand did not expand for the first time since December 2015, when the index registered 49.6%,” Fiore said, adding that production rose for the 34th-consecutive month.

Employment rose 0.8 percentage point to 54.5%. “Comments were predominantly ‘pro hire’ in support of capacity expansion, replacing retiring workers and adding summer help,” Fiore said. “Few comments were in support of hiring freezes and head-count reductions.”

Supplier deliveries dropped 1.3 points to 50.7%, the 40th-straight month of declines. “Supplier deliveries are improving with many respondents noting more readily available goods and shorter lead times,” Fiore said.

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