The US manufacturing sector contracted significantly in the month of October, as the nation’s manufacturers cut back on production at a faster pace than expected, according to the Institute of Supply Management‘s manufacturing index. The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better this month than last. The PMI came in at 38.9%, down from 43.5% in September, its lowest level since September 1982 and clearly in recessionary levels. Economists were surprised by the number, as forecasts had the number closer to 41.5%. Readings above 50% indicate growth, and anything below, contraction.

The Last 12 Months

Month PMI Month PMI
Oct 2008 38.9 Apr 2008 48.6
Sep 2008 43.5 Mar 2008 48.6
Aug 2008 49.9 Feb 2008 48.3
Jul 2008 50.0 Jan 2008 50.7
Jun 2008 50.2 Dec 2007 48.4
May 2008 49.6 Nov 2007 50.0
Average for 12 months — 48.1
High — 50.7
Low — 38.9

The September new-orders index plunged to 32.2% from 38.8% in September, the ISM’s data showed. The production index fell to 34.1% from 40.8%. Both are at multi-decade lows.

The employment index dropped 7.2 percentage points to 34.6%, from a 41.8% reading in September.

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