American factory activity slowed for the third month in a row in October.
The Institute of Supply Management’s manufacturing index came in at 48.3 on Friday, slightly below the consensus estimate of 48.9, showing that the sector continued to contract last month. The index measures month-to-month changes in the industry.
“Comments from the panel reflect an improvement from the prior month, but sentiment remains more cautious than optimistic,” said Timothy Fiore, chair of the ISM’s manufacturing business survey committee.
America’s factories have been hit by a downturn in global demand as the world economy slows and repercussions from the trade war become increasingly apparent.
“Net, net, the manufacturing sector weakness appears to be stabilizing after falling below the 50 level and into recession in August. The outlook for nation’s factories isn’t growing any worse and the manufacturing recession isn’t intensifying,” said Chris Rupkey, chief financial economist at MUFG.
Things could improve further with the end to the 40-day GM strike, Rupkey said, after the production component of the index was dragged down between September and October.
Even so, a sustained rebound in global growth is not looking likely and there is “the very real prospect that trade negotiations with China once again break down,” said Andrew Hunter, senior US economist at Capital Economics. “We still expect manufacturing conditions to remain unusually weak over the coming months,” he said.