ISM Manufacturing Survey Shows Continued Contraction; S&P Data Indicate Faster Growth

12:52 PM EST, 11/03/2025 (MT Newswires) -- Two surveys released Monday presented mixed trends in the US manufacturing sector for October, with Institute for Supply Management data showing continued contraction and an S&P Global (SPGI) report indicating growth for a third consecutive month.

The ISM purchasing managers' index fell to 48.7 last month from 49.1 in September, marking an eighth straight month of contraction. A reading below 50 indicates the manufacturing sector is generally contracting. The consensus was for a 49.5 reading in a survey compiled by Bloomberg.

The new orders index improved to 49.4 in October from 48.9 the month before, while production decreased to 48.2 from 51. The employment index rose to 46 from 45.3, while the prices gauge eased.

"The moderation in the price index adds to the case for the Federal Reserve to reduce interest rates again, and carries added importance given that it seems October (consumer price index) is unlikely to be released anytime soon due to the (ongoing US federal) government shutdown," TD Economics Senior Economist Vikram Rai said in a separate report. "Survey respondents continue to report substantial struggles with adjusting to tariffs, in addition to weak demand conditions."

On Wednesday, the Fed lowered its benchmark lending rate by 25 basis points and reiterated concerns regarding the labor market. Markets are pricing in a 65% probability that the central bank will cut interest rates by a quarter percentage point next month, according to the CME FedWatch tool.

Separately, S&P Global (SPGI) said its manufacturing PMI increased to 52.5 in October from 52 the previous month, representing the third consecutive month of expansion. Output and new orders rose at stronger rates, while tariffs negatively impacted international trade and weighed on new exports. Employment growth continued to be modest, according to the data provider.

"US manufacturers reported a solid start to the fourth quarter with production rising at an increased rate in response to an encouragingly robust jump in new orders," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. However, companies have become less optimistic regarding the year ahead, with "sentiment back down close to the gloomy levels seen around the April tariff announcements," Williamson said.

Last week, US President Donald Trump reportedly said he would lower tariffs on China to 47% from 57%.

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