Manufacturing Reports Show Strong Positives

The manufacturing PMI had been lagging other private and regional data but is now signaling solid and accelerating growth for the sector. The index rose to 54.6 for the final October reading for its best showing since early in the year. This compares with 54.5 for the October flash and 53.1 in September. New orders are on the rise especially export orders which posted their best monthly advance since August last year. And employment is also very strong with its best showing since June 2015. Production is up, inventories are up, costs remain elevated, and selling prices are showing traction. Hurricane effects haven't yet passed and are still working through the supply chain with delivery times still slowing. The past two durable goods reports out of Washington have been very strong and gains among the softer data, like today's report, hint perhaps at substantial acceleration for the factory sector going into year end. 

Recent History Of This Indicator:{
PMI manufacturing accelerated sharply in October's flash, up 1.5 points to a solid 54.5 and an 8-month high. New orders and employment were highlights while delivery delays, tied to Hurricanes Harvey and Irma, gave perhaps a one-time boost to the composite index. Forecasters see no change for final October with the consensus at 54.5. 

...meanwhile...

ISM manufacturing's sample reports only slight cooling, at a still unusually strong composite of 58.7 in October vs September's 13-year high of 60.8. New orders remain the stand-out positive in the report, at 63.4 for only a 1.2 percent dip from September's 4-year high at 64.6. Export orders, like those in this morning's earlier PMI manufacturing report, are a strong positive. Employment is also unusually strong, at 59.8 and only 5 tenths lower from the 6-1/2 year high in the last report.

Delivery times, delayed by hurricane effects, continue to lengthen but to a slightly lesser degree which points at improvement. Pulling down the composite are inventories of raw materials which contracted in the month in what likely reflects delivery delays. Input costs remain very elevated, again another hurricane effect.

Backlog orders continue to build and production continues to hum along. But production in the Federal Reserve industrial production report has yet to show anywhere near the strength of the production reading in this report -- at least not yet. With durable goods orders posting two straight strong months, the signals from private data like today's report are growing more convincing.

Recent History Of This Indicator:
The ISM manufacturing index has been surging this year, beating Econoday's consensus for 5 straight months and often, as in September, by very wide margins. September's 60.8 marked a 13-year best though hurricane-related delivery delays did skew the score higher. Yet strength has been very evident with new orders at a 4-year high and employment at a 6-1/2 year high. The Econoday consensus for October calls for cooling, to 59.5.