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Purchasing Managers´Index October 2011

03-11-2011 11:58

PMI climbs to 49.8 in October 2011 – mixed signals as to where the industrial economy is headed

  • The PMI rose from 48.1 in September to 49.8 in October. This increase notwithstanding, the index has remained beneath the 50 mark – the boundary between growth and contraction in industry – for the past three months (August-October). The industrial economy has thus weakened considerably since the May-July three month period. 
  • The component index for new orders accounted for the most significant positive contribution to the PMI. Both new orders and employment landed above the 50 mark, which indicates that the decline in the industrial economy leveled off somewhat in October.
  • Industrial companies continue to revise their production plans downward, though not as much as during the previous three month period. Plans remain geared toward expansion, but are more modest than before. Combined with inventory reductions, this indicates that companies are preparing for a weaker economy.
  • Price pressure from producers continues to drop, and more sharply at that. The index for commodity and intermediate goods prices fell from 47.0 in September to 39.9 in October, which was consistent with the drop in commodity prices, as well as the outlook for economic cooling.

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