US manufacturers saw an encouraging uptick in new orders in October despite a slight fall in the overall index of their output, new data shows.
The Institute for Supply Management (ISM) said its index of national factory activity dipped to 50.8 from 51.6 the month before, missing expectations for a reading of 52.0.
But economists said the result was better than it appeared, as most of the fall in the headline index was due to the prices paid index, which dropped from 56 to 41.
“With prices paid for inputs falling, manufacturers should be seeing a margins expansion, which bodes well for the future,” said ING economist Rob Carnell.
“And a more optimistic spin comes from the forward looking new orders series - which seem to be driven by strengthening domestic demand, and picked up by more than the production index fell.”
The new orders index rose to 52.4, its highest level since April, from 49.6 in the past two months. The employment index eased to 53.5 from 53.8.
“The other headline components slipped but these declines are in response to the prior weakness in orders. We doubt the lagging components need to fall further, so the headline index is unlikely to decline again,” said High Frequency Economics chief economist Ian Shepherdson.
“In short, manufacturers are not happy, but the downshift in confidence looks to be over – Eurochaos notwithstanding.”