Manufacturing expands in October

Purchasing Manager’s Index hits highest level so far in 2013

The U.S. manufacturing economy expanded for the fifth straight month in October, edging up to its highest level so far in 2013, according to the Institute for Supply Management’s October Manufacturing Report on Business.

ISM’s monthlyPurchasing Manager’s Index (PMI) for October reached 56.4, up 0.2% over September’s reading of 56.2. The report reflected growth in new orders, production, employment and inventories, but showed slowing supplier deliveries.

A PMI above 50 reflects growth among U.S. manufacturing organizations; a reading below 50 indicates contraction.

ISM said purchasing managers who participated in the report were generally positive about the overall economy, but gave mixed responses about whether or not the recent government shutdown and potential default have had any effect on the October results.

The results will come as welcome news to supply chain companies—especially those in the electronics sector, where flat to slight growth has become the norm over the last two years. Ed Smith, president of components distributor Avnet Electronics Marketing Americas, predicts a flat market for electronics distribution in 2013, for instance, echoing the concerns of many industry executives at the recent Electronic Components Industry Association’s Executive Conference in Chicago.

“The reason this is problematic is because this has never happened before,” in this industry, Smith explained in an interview during the two-day meeting in late October. He pointed to the more traditional cyclical growth seen in electronics distribution. “I think things will be flat for a number of years … I just don’t know what [is going to] break the log jam.”

Of the 18 manufacturing industries surveyed for the ISM report, 14 reported growth during the month: textile mills; food, beverage and tobacco products; furniture and related products; printing and related support activities; electrical equipment, appliances and components; computer and electronic products; transportation equipment; petroleum and coal products; wood products; plastics and rubber products; nonmetallic mineral products; machinery; paper products; and fabricated metal products. The four industries reporting contraction in October are: apparel, leather and allied products; primary metals; chemical products; and miscellaneous manufacturing.

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