U.S. manufacturing activity reached its highest level in two years in October, according to IHS Markit’s Flash U.S. Manufacturing Purchasing Managers’ Index data released Friday. The index posted a reading of 53.3 in October, up from 53.2 in September.
This month’s reading was slightly below economists’ forecasts, which called for the index advancing to 53.5, but a measure of new orders received by factories edged higher and the pace of expansion was the highest since January 2019. A reading above 50 suggests expansion, while below 50 indicates contraction.
“The U.S. economy looks to have started the fourth quarter on a strong footing, with business activity growing at a rate not seen since early 2019,” IHS Markit’s chief business economist, Chris Williamson, said in a statement. “The service sector led the expansion as increasing numbers of companies adapted to life with COVID-19, while manufacturing continued to report solid growth amid rising demand from households and businesses.”
The data marks the fourth straight month of manufacturing activity expansion, and manufacturers indicated greater confidence in the outlook for output. The IHS Markit data follows other recent positive indications of growth in the manufacturing industry—including the Institute for Supply Management’s index as well as the RSM US Manufacturing Outlook Index—as businesses rebound somewhat from the downturn.
Also of note, the report identified that manufacturers registered a slower rise in employment in October and goods producers noted an increase in discounting to attract clients, with selling prices rising only modestly.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
