U.S. manufacturing sector contracts for third month in a row

WASHINGTON, Nov. 1 (Xinhua) — Economic activity in the U.S. manufacturing sector contracted in October, the third month in a row, the Institute for Supply Management (ISM) said Friday.

The U.S. Purchasing Managers’ Index (PMI) stood at 48.3 percent, bouncing back from the September reading of 47.8 percent, which was the lowest in a decade. Any reading below 50 percent indicates the manufacturing sector is generally contracting.

“Comments from the panel reflect an improvement from the prior month, but sentiment remains more cautious than optimistic,” Timothy Fiore, chair of the ISM’s manufacturing business survey committee, said in a statement. “Global trade remains the most significant cross-industry issue.”

Of the 18 manufacturing industries, only five reported growth in October, while 12 industries reported contraction.

The latest manufacturing data confirmed that Washington’s tariffs against imports from China and other trading partners continued to take a toll on American businesses and the overall economy.

“Economy is showing slight signs of weakening. The same business headwinds on trade, tariffs, and currency uncertainty are making the environment challenging,” said an executive from the industry of food, beverage and tobacco products.

“The past relationship between the PMI and the overall economy indicates that the PMI for October (48.3 percent) corresponds to a 1.6-percent increase in real gross domestic product (GDP) on an annualized basis,” said Fiore.

The U.S. economy expanded at an annual rate of 1.9 percent in the third quarter of the year, slightly lower than the 2-percent growth rate in the second quarter, the Commerce Department reported on Wednesday. This marks a further deceleration from the first quarter’s 3.1-percent growth rate.

The U.S. Federal Reserve on Wednesday lowered interest rates for the third time this year amid a further slowdown in U.S. economic growth, but signaled a pause in its easing cycle.

Despite strong household spending, business investment and exports “remain weak,” and manufacturing output has declined over the past year, Fed Chairman Jerome Powell said. “Sluggish growth abroad and trade developments have been weighing on those sectors,” he said.