Manufacturing falls in the final revision
- Prelim was 59.2
- 60.7 prior
- Firms passed through higher input prices to their clients, as charges rose at the fastest pace on record
- New orders elevated but slowest in 10 months
- "Companies continued to highlight strong demand conditions, but some noted that raw material shortages were hampering demand from clients as stocks of inputs had already been built or delivery times were too extensive"
- Raw material and labour shortages were commonly cited as hampering the upturn
- Output expectations dropped to a 12-month low in October amid concerns regarding inflation and supply-chain disruption
It's a struggle to judge where this ends up. Obviously demand is very high and I assume inventory building will be a theme through 2023 but you can't discount the risks around inflation and knock-on effects from supply chain problems.
Chris Williamson, Chief Business Economist at IHS Markit said:
"October saw US manufacturers report yet another near-record lengthening of supply chains, with shortages of components constraining production growth to the lowest since July of last year. Around half of all companies reporting lower production in October attributed the decline to a lack of supplies. However, a further one-in-ten cited a lack of labor, and one-in-four reported that demand had fallen, often as a result of customers either lacking other inputs or pushing back on higher prices.
"Although production growth has now slipped below the pre-pandemic long-run average due to the supply and labor constraints, demand growth - as measured by new order inflows - remains well above trend despite easing in October, hence producers saw another steep rise in backlogs of uncompleted work. This shortfall of production relative to demand was the principal driving force behind a survey record rise in manufacturers' selling prices, suggesting that inflationary pressures continue to build and look unlikely to abate to any significant degree any time soon."
