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October Manufacturing Index Stronger Than Expected, Comments from Dr. Joe Webb

Press release from the issuing company

November 4, 2003 -- Economic activity in the manufacturing sector grew in October for the fourth consecutive month, while the overall economy grew for the 24th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business. The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "The manufacturing sector enjoyed its fourth consecutive month of growth as new orders continue to lead the recovery. Production made a sharp swing upward during October, signifying growth for the sixth consecutive month." ISM's Backlog of Orders Index indicates that order backlogs improved again in October. However, manufacturing Employment continued to decline in October as the index remained below the breakeven point (50 percent) for the 37th consecutive month. ISM's Prices Index indicates that manufacturers experienced higher prices for the 20th consecutive month. New Export Orders grew in October for the 22nd consecutive month, while October's Imports Index grew for the 12th consecutive month. Comments from purchasing and supply managers seem to be lagging the data. The indexes indicate significant improvement, but the purchasing and supply managers' comments do not reflect this trend. It appears that some industries are not yet experiencing the upturn. ISM's PMI is 57 percent in October, an increase of 3.3 percentage points when compared to 53.7 in September. ISM's New Orders Index rose 3.9 percentage points from 60.4 percent in September to 64.3 percent in October. ISM's Production Index rose 5.3 percentage points from 57.3 percent in September to 62.6 percent in October. The ISM Employment Index is at 47.7 percent for October, an increase of 2 percentage points when compared to the 45.7 percent reported in September. ISM's Supplier Deliveries Index registered 53.9 percent, 1.5 percentage points higher than September's 52.4 percent. ISM's Inventories Index rose to 44.5 percent in October from the 42.7 percent reported in September. ISM's Customers' Inventories Index for October is at 39 percent, a decrease of 5.5 percentage points compared to the September reading of 44.5 percent. ISM's Prices Index in October is 58.5 percent, 2.5 percentage points higher than the 56 percent reported in September. ISM's Backlog of Orders Index increased 1 percentage point, registering 53.5 percent in October compared to 52.5 percent in September. ISM's New Export Orders Index registered 59.6 percent, up 6.7 percentage points from September's 52.9 percent, while ISM's Imports Index declined 3.4 percentage points to 57.3 percent in October from 60.7 percent in September. "This is the best report that we have seen in quite some time in terms of the overall strength of manufacturing. The picture continues to improve, and it appears that manufacturing will finish 2003 on a very positive note, assuming the recent trend continues," said Ore. Comments from Dr. Joe Webb: "This manufacturing report was stronger than expected, and holds promise for yet further strength. Production and new orders were very strong, and inventories were considered too low both for the manufacturers and their customers. Those inventories will have to be replenished. Employment in manufacturing was still contracting, meaning that some of the productivity numbers we will be getting soon should be quite outstanding." Premium Access Members at WhatTheyThink.com can view more analysis in Dr. Joe Webb’s weekly column on Friday, appropriately called “Fridays with Dr. Joe”.