Market News

Last week, favorable feelings about factories factored into the broadly positive outlook on future domestic economic growth. On Monday, November 2nd, the Institute of Supply Management (ISM) released the October reading of its Manufacturing Purchasing Managers' Index (PMI), a widely followed survey of manufacturing businesses across the country. The index rose to 59.3 last month, its highest level in over two years. For this index, a reading above 50.0 indicates that the managers of manufacturing companies see economic growth in the sector, with a higher reading indicating greater growth prospects. A score below 50.0 signifies that the industry expects economic contraction.  The number for October smashed analysts' expectations, and it indicates that sentiment in the sector is strengthening to pre-COVID levels after the sharp downturn in the spring of 2020 (see the chart below).  The component of the survey that gauges new orders flowing into factories hit its highest level in 17 years, with 16 of the 18 sub-industries followed in the survey registering significant new order growth. The chairman of the ISM, Tim Fiore, summarized the positive news in the press release accompanying the data:

 "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.”