U.S. factory activity increased for a second straight month in October amid a pickup in production and hiring, supporting views that the embattled manufacturing sector would regain some momentum in the fourth quarter.
As Reuters reports, the Institute for Supply Management says today its index of national factory activity rose 0.4 percentage points to a reading of 51.9% last month. A reading above 50 indicates an expansion in manufacturing, which accounts for about 12% of the U.S. economy.
Manufacturing has suffered a prolonged slump in the aftermath of the dollar’s surge between June 2014 and December 2015, which has constrained exports. Activity has also been hurt by the collapse in oil drilling after oil prices plunged
“The latest data suggest that the manufacturing sector is starting to pick up some momentum following a weak run through most of the year so far,” says Daniel Silver, an economist at JPMorgan in New York. “The sector is due for some improvement as some of the earlier drags that impacted the sector fade.”
The ISM production sub-index gained 1.8 percentage points to 54.6. But a gauge of new orders slipped to a reading of 52.1 from 55.1 in September, suggesting any future gains in manufacturing activity would be modest. A measure of factory employment jumped 3.2 percentage points to a reading of 52.9.
The data came as Federal Reserve officials gathered for a two-day meeting to deliberate on monetary policy. The U.S. central bank is not expected to raise rates at the end of the meeting on Wednesday, which comes less than a week before the Nov. 8 presidential election, but is expected to do so in December.
