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By Lorraine Woellert
WASHINGTON - Manufacturing in the U.S. expanded in October at a faster pace than projected as orders and production picked up, showing the industry is stabilizing.
The Institute for Supply Management’s factory index climbed to 51.7 last month, the highest since May, from 51.5 in September, the Tempe, Arizona, group reported today. Economists estimated 51 for October, according to the median estimate in a Bloomberg survey. A reading of 50 is the dividing line between growth and contraction.
The report shows American factories are holding up in the face of a global economic slowdown that’s weakened manufacturing from Asia to Europe. At the same time, companies such as Cummins Inc. are feeling the effects of the so-called fiscal cliff that’s prompted cutbacks in equipment purchases.
“We’re back to the recovery track,” said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, before today’s report. “Weak growth is better than being dead in the water.”
Estimates ranged from 49.2 to 52.5 in the survey of 88 economists. The Tempe group has said that a reading above 42.5 generally is consistent with an expanding overall economy. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.
The group’s production index increased to 52.4 last month from 49.5 in September. The new orders measure climbed to 54.2 from 52.3. The gauge of export demand was little changed at 48 from 48.5.
The employment index fell to 52.1 from a three-month high of 54.7. The index of prices paid dropped to 55 from 58. A measure of supplier deliveries decreased to 49.6 from 50.3.
A measure of orders waiting to be filled decreased to 41.5 from 44.
Elsewhere, China’s manufacturing expanded for the first time in three months as output and new orders climbed, adding to signs growth in the world’s second-biggest economy is rebounding after a seven-quarter slowdown.
The Purchasing Managers’ Index climbed to 50.2 in October from 49.8 in September, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. A separate survey from HSBC Holdings Plc and Markit was at an eight-month high.
In the U.K., manufacturing contracted more than economists forecast in October on waning domestic demand and as export weakness spread to Asia from Europe. A gauge based on a survey of purchasing managers fell to 47.5 from a revised 48.1 in September, Markit and the Chartered Institute of Purchasing and Supply said in London today. Economists had forecast a decline to 48, according to the median of 27 estimates in a Bloomberg survey.