RBS: Shutdown Did Little to Dampen Strength in Manufacturing

Friday, 01 Nov 2013 12:08 PM

 

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The U.S. manufacturing sector expanded at its fastest pace in years in October despite a partial government shutdown during the first half of the month, according to one industry report, even as a separate reading showed factory output grew at its slowest rate in a year last month.

The Institute for Supply Management said its index of national factory activity rose to 56.4 in October, its best showing since April 2011. Financial data firm Markit said its final U.S. Manufacturing Purchasing Managers Index stood at 51.8 last month, beating the preliminary October reading but notching the worst final showing since October 2012.

Both figures indicated expansion in the manufacturing sector and ISM's figure beat expectations of a slight slowdown in the growth rate. The two surveys use some different methodologies, including one related to seasonal adjustment.

"The underlying components were a little mixed, but for the most part, this report continued to point to strength in the factory sector," said RBS analysts in a note about the ISM figures. "It seems like the shutdown did little to dampen the underlying strength in manufacturing in October."

Analysts expected weaker readings after a political stalemate in Washington forced a partial federal government shutdown through the first 16 days of October.

October was the fifth consecutive month of quicker growth in the goods-producing sector since it contracted in May, according to ISM's data.

The mixed results in Friday's readings underscored uncertainty over the state of the world's largest economy, just days after the Federal Reserve suggested it still sees a need for stimulus and maintained its $85 billion per month bond-buying program to prop up the economy.

Job growth in the broader U.S. economy was tepid in September, and economists polled by Reuters expect a government report due on November 8 to show hiring slowed further in October.

Separate U.S. data showed October auto sales for the three Detroit-based automakers rose by double-digits from a year earlier, but results at Ford and Chrysler narrowly missed analysts' expectations.

© 2014 Thomson/Reuters. All rights reserved.

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