US manufacturing activity strengthened in October, according to the Institute for Supply Management. Its manufacturing purchasing managers’ index rose to 55.5 points from 54.5 points in the previous month, comfortably above the 50-point threshold that signals expansion.
New orders rose to 55.5 from 55.3. Employment eased to 52.4 from 52.7, still in expansion territory. Prices paid by manufacturers fell to 75.2 from 77.9, a sign that cost pressures were cooling.
Implications for Fed policy
Kevin Warsh, the Federal Reserve chair, said at the previous meeting that more information was needed before the next rate decision. A portfolio commentary cited in the report said the data was the first important piece of such information ahead of that decision, and pointed more toward a rate hike.
The same commentary said services-sector trends were similar.
Oil offers a counterweight
Oil prices fell sharply on the day of the report. The commentary said the decline may offset some of the inflationary signal in the manufacturing data.
Source: Institute for Supply Management
