Manufacturing continues its recovery. Key index reaches highest level since September 2018.

Earlier, we reported on the Association of Washington Business Manufacturing Week activities, including AWB president Kris Johnson’ observation,

…when we finally emerge from the pandemic, manufacturing will no doubt lead the economic recovery.

Today, the Institute of Supply Management provides some evidence that the manufacturing sector is making its contribution to that recovery.

Economic activity in the manufacturing sector grew in October, with the overall economy notching a sixth consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM®Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management®(ISM®) Manufacturing Business Survey Committee.

“The October Manufacturing PMI® registered 59.3 percent, up 3.9 percentage points from the September reading of 55.4 percent and the highest since September 2018 (59.3 percent). This figure indicates expansion in the overall economy for the sixth month in a row after a contraction in April, which ended a period of 131 consecutive months of growth.

Calculated Risk writes,

This was above expectations and the employment index moved above 50.

This suggests manufacturing expanded at a faster pace in October than in September.

The Associated Press reports,

It was the highest level for this closely watched barometer of manufacturing health since September 2018. Any reading above 50 signals that manufacturing is expanding.

The gauge had fallen into recession territory from March through May as much of the country shut down in an effort to contain the coronavirus.

More from ISM:

“The manufacturing economy continued its recovery in October. Survey Committee members reported that their companies and suppliers continue to operate in reconfigured factories; with every month, they are becoming more proficient at expanding output. Panel sentiment was optimistic (two positive comments for every cautious comment), a slight decrease compared to September. Demand expanded, with the (1) New Orders Index growing at strong levels, supported by the New Export Orders Index expanding moderately, (2) Customers’ Inventories Index at its lowest figure since June 2010 (35.8 percent), a level considered a positive for future production, and the (3) Backlog of Orders Index expanding at a slightly faster rate compared to the prior three months…

“Manufacturing performed well for the third straight month, with demand, consumption and inputs registering growth indicative of a normal expansion cycle. While certain industry sectors are experiencing difficulties that will continue in the near term, the overall manufacturing community continues to exceed expectations,” says Fiore.

Good news.