U.S. ISM manufacturing PMI declines unexpectedly

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Forexpros - Manufacturing activity in the U.S. declined unexpectedly in October, industry data showed on Tuesday.

In a report, the Institute for Supply Management said its index of purchasing managers fell by 0.8 points to 50.8 in October, down from 51.6 in September.

Analysts had expected the ISM index of purchasing managers to ease up by 0.5 points to 52.1 in October.

On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.

The report showed that the ISM index of manufacturing prices fell sharply in October, dropping by 15.0 points to 41.0 from 56.0 in September. Analysts had expected manufacturing prices to fall by 1.0 point to 55.0. The index fell below 50.0 for the first time since May 2009.

The New Orders Index increased 2.8 points from September to 52.4, indicating a return to growth after three months of contraction.

Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee said, 'Comments from respondents are mixed, indicating positive relief from raw materials pricing and continuing strength in a few industries, but there is also more concern and caution about growth in this uncertain economy."

Following the release of the data, the U.S. dollar added to strong gains against the euro, with EUR/USD tumbling 1.55% to trade at 1.3642.

Meanwhile, U.S. equity markets extended losses following the report. The Dow Jones Industrial Average plunged 2.05%, the S&P 500 index sank 2.3%, while the Nasdaq Composite index dropped 1.1%.


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