U.S. Manufacturing Shrinks for Eighth Straight Month

U.S. factory activity shrank in October for the eighth consecutive month, driven by a pullback in production and weak demand.

Manufacturers remain concerned about the general lack of clarity on trade policy from the Trump administration. (Photo: General Motors) 

The Institute for Supply Management’s (ISM) manufacturing index eased 0.4 point to 48.7, data released Monday showed. Readings below 50 indicate contraction, and the measure has been stuck in a narrow range for most of this year, Nazmul Ahasan reported for Bloomberg News.

The group’s production index slid 2.8 points to 48.2, marking the second month in the last three that output has contracted.

The weakness is keeping headcounts depressed. The ISM’s employment gauge shrank for a ninth straight month, though at a slightly slower pace than in September.

Manufacturers remain concerned about the general lack of clarity on trade policy from the Trump administration, said Susan Spence, chair of the ISM Manufacturing Business Survey Committee, during a call with reporters.

“It’s the overall tone of ‘we don’t know what country is coming next; we don’t know what commodity is coming next,’” Spence said.

Meanwhile, inflationary pressures continued to ease. The index of prices paid for raw materials fell nearly four points to 58 — the lowest since the start of the year. Since a recent peak in April, during the height of the tariff rollout, the price gauge has dropped nearly 12 points.

“The most encouraging aspect of the report was the 3.9-point fall in the prices paid index to 58.0, its lowest level since tariffs were imposed,” said Thomas Ryan, North American economist at Capital Economics, in a note.

“This brings the index back in line with its 10-year average and indicates the worst of the tariff-driven pressure on manufacturers’ input costs is likely behind us.”