The Institute for Supply Management’s index climbed to 56.4, the highest since April 2011, from 56.2 a month earlier, the Tempe, Arizona-based group’s report showed today. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 55.
Helping to sustain the production are rebounding motor vehicle sales and a recovery in the housing market, perfect timing as global markets have been bullish and investors are riding the stock market rally of recent months. The figures released from today show the lack of effect on manufacturing last month’s government shutdown had actually had.
“The government closure didn’t have much effect on manufacturing — this is a modest pace of growth and fairly well-sustained,” said Terry Sheehan, an economic analyst at Stone & McCarthy Research Associates in Princeton, New Jersey, who projected a reading of 56.4. “We actually see some increase in the export orders, so it’s possible that some of the slowness in the global economy is beginning to ease.”
Stocks maintained gains after the announcement of the figures. The S&P 500 Index advanced approximately 0.2% to 1,760.56, this morning at around 10:56AM. Estimates for the factory index from 83 economists in the Bloomberg survey ranged from 52.5 to 57.5. Manufacturing accounts for about 12 percent of the economy. Of the 18 industries covered, 14 reported expansion in October, led by textile mills, the ISM said.