2017.11.0110:18:00UTC+00U.S. Manufacturing Index Pulls Back Off Thirteen-Year High In October

A report released by the Institute for Supply Management on Wednesday showed a slowdown in the pace of growth in U.S. manufacturing activity in the month of October.

The ISM said its purchasing managers index fell to 58.7 in October from 60.8 in September, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 59.5.

The bigger than expected pullback by the manufacturing index came after it jumped to its highest level in over thirteen years in the previous month.

Despite the decrease, the ISM said the index indicates growth in manufacturing for the 14th consecutive month and continues expansion consistent with pre-hurricane levels.

The pullback by the headline index reflected slowdowns in new orders and production growth, as the new orders index dropped to 63.4 in October from 64.6 in September and the production index fell to 61.0 from 62.2.

The report also indicated a modest slowdown in the pace of job growth in the manufacturing sector, with the employment index dipping to 59.8 in October from 60.3 in September.

On the inflation front, the prices index slumped to 68.5 in October from 71.5 in September, suggesting a slowdown in the pace of price growth.

"All in all it is a very good report that suggests the sector has made an excellent start to 4Q," said ING Senior Economist James Knightley. "This should give the Federal Reserve even greater confidence that it can continue with its "gradual" pace of policy tightening."

He added, "We still look for a December rate hike followed by at least two more next year, irrespective of who leads the Fed."

The ISM is scheduled to release a separate report on Friday on activity in the service sector in the month of October. The index of activity in the sector is expected to drop to 58.6 in October from 59.8 in September.