Manufacturing slump continues in October

We don’t get much economic data these days with the government still shut down, so when any bit of information comes out from other places, it’s grabbed onto more. And the information from an index of US manufacturing activity shows that things were going mostly the same way that they were before the shutdown.

The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

“The Manufacturing PMI® registered 48.7 percent in October, a 0.4-percentage point decrease compared to the reading of 49.1 percent recorded in September. The overall economy continued in expansion for the 66th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index contracted for the second month in October following one month of growth; the figure of 49.4 percent is 0.5 percentage point higher than the 48.9 percent recorded in September. The October reading of the Production Index (48.2 percent) is 2.8 percentage points lower than September’s figure of 51 percent. The Prices Index remained in expansion (or ‘increasing’ territory), registering 58 percent, down 3.9 percentage points compared to the reading of 61.9 percent reported in September. The Backlog of Orders Index registered 47.9 percent, up 1.7 percentage points compared to the 46.2 percent recorded in September. The Employment Index registered 46 percent, up 0.7 percentage point from September’s figure of 45.3 percent….

“The New Export Orders Index reading of 44.5 percent is 1.5 percentage points higher than the reading of 43 percent registered in September. The Imports Index registered 45.4 percent, 0.7 percentage point higher than September’s reading of 44.7 percent.”

Now, if you didn’t know better, you’d say this indicates improvements from September. But that’s not true. It meant manufacturing activity kept declining in October and prices kept going up, just not as badly as they were in September.

The ISM report goes on to say that some sectors had significant declines last month.

“Looking at the manufacturing economy, 58 percent of the sector’s gross domestic product (GDP) contracted in October, down from 67 percent in September, however; the percent of GDP in strong contraction (registering a composite PMI® of 45 percent or lower), is at 41 percent, up 13 percent from September. The share of sector GDP with a PMI® at or below 45 percent is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, only two (Food, Beverage & Tobacco Products; and Transportation Equipment) expanded in October,” says Spence.

And “strong contraction” is when you are more likely to see sizable job losses, vs muddling through some doldrums.

While it's nice to put the numbers to things, I think this rundown at the top of the ISM report sums it well.

So should I assume manufacturing was one of the sectors the Treasury Secretary was talking about this weekend?

TAPPER: Do you agree that the US is at risk of a recession? BESSENT: I believe we are in a transition period here. I think we're in good shape, but there are sectors of the economy that are in recession

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— Aaron Rupar (@atrupar.com) November 2, 2025 at 8:19 AM