US economy

US manufacturing growth slows more than expected in October — ISM


A closely-watched gauge of US manufacturing sentiment fell sharply in October, but the number is likely to do little to deter policymakers from sticking to their plans for more gradual interest rate rises this year and next.

The Institute for Supply Management said the reading for its manufacturing index came in at six-month low of 57.7 last month. That compares to 59.8 recorded in September and badly undershot the reading of 59 that the market had expected.

Readings above 50 indicate that output in the industry is rising and October’s figure represents the 26th straight month that the sector has expanded.

The US economy has proved to be surprisingly resilient this year, with growth coming in at a better than expected annualised pace of 3.5 per cent during the third quarter, thanks to robust consumer spending.

But Thursday’s report underscores how President Donald Trump’s trade dispute with the rest of the world is translating into higher costs for US manufacturers.

“Tariffs are causing inflation: increased costs of imports, increased cost of freight and increased domestic costs from suppliers who import,” noted one respondent from the chemical products sector.

“Steel tariffs continue to negatively affect our cost, even though we utilise US sources for steel. Oil prices put meaningful upward pressure on cost. Continued tightness with truck drivers is expected,” said another respondent from the petroleum and coal products business.



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