October data indicated a robust and accelerated expansion of production levels across the manufacturing sector. The latest rise in output was the fastest since March, which brought the pace of expansion back in line with the post-crisis average. Survey respondents mainly cited improving demand from domestic markets and competitive pricing strategies. At the same time, global economic uncertainty and lower energy sector capex were teportedly factors acting as a brake on manufacturing growth in October.
Volumes of new work received by U.S. manufacturers expanded at a strong pace in October, with the latest rise the steepest for seven months. Although export sales made only a modest contribution to new business growth, the latest increase in new orders from abroad was the fastest since February.
Improved sales patterns and rising production requirements contributed to a rebound in job creation from the 27-month low recorded during September. Manufacturers signalled the sharpest increase in payroll numbers since July, but the pace of staff hiring was still weaker than the post-crisis average.
Manufacturers remained cautious in terms of their inventory holdings and input buying during October. Reflecting this, stocks of finished goods decreased for the third successive month. The latest survey marked two years of rising purchasing activity at manufacturing companies, but their pre-production inventories increased only modestly.
October data pointed to another moderate reduction in average cost burdens across the manufacturing sector. Anecdotal evidence highlighted the strong dollar exchange rate and falling raw material prices, especially for steel.
Meanwhile, the latest survey indicated that factory gate charges were broadly unchanged over the month. As a result, the seasonally adjusted Output Charges Index was little-changed from the 37-month low recorded in September.