Fleet Management

Economic Watch: Manufacturing Expanding, Construction Down

November 03, 2014

By Evan Lockridge

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Economic activity in the manufacturing sector expanded in October for the 17th consecutive month, its highest level since March 2011, according to nation’s supply executives.

The Institute of Supply Management’s manufacturing index registered 59%, an increase of 2.4 percentage points from September’s reading of 56.6%. A reading above 50% indicates expansion while one below 50% indicates contraction.

The New Orders Index registered 65.8%, an increase of 5.8 percentage points from the 60% reading in September, indicating growth in new orders for the 17th consecutive month.

Comments from the panel generally cite positive business conditions, with growth in demand and production volumes, according to ISM, with 16 of 18 manufacturing industries reporting growth in October.

However, a separate report on manufacturing indicates a little slowing in the sector, with output and new business growth both moderating, according to the Manufacturing Purchasing Managers Index from the financial information services provider Markit.

The seasonally adjusted final numbers posted 55.9 in October to remain well above the neutral 50 threshold, however, the headline index dropped from 57.5 in September the slowest overall improvement in business conditions for three months.

“October’s survey highlights that the revival in U.S. manufacturing conditions remains on track. Production levels expanded at an impressive rate by international standards and overall momentum is still stronger than the post-recession trend,” said Tim Moore, senior economist at Markit. “However, the latest figures indicate that the recovery has lost some intensity at the start of the fourth quarter, reflecting subdued export demand from the Euro area and key emerging markets.”

Finally, a third measure of the health of the economy shows total construction spending in the U.S. fell in September 0.4% from the revised August level, according to the U.S. Commerce Department, marking the second straight monthly drop.

The September level is 2.9% higher than from the same time a year earlier while it is 6.1% more in the first nine months of the year than compared to the first nine months of 2013.

The September decline was due to a 0.6% drop in non-residential construction the month before, which outweighed a 0.4% improvement in residential construction during the same time. The overall figure was also pulled down by a 3.7% drop in highway construction during September.

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