October ISM Manufacturing: 50.1 Percent, Down From 50.2 Percent in Sept.; Underlying Metrics Mostly Contract or Barely Expand

From the Institute for Supply Management — I think I smell something that’s been cooked (bolds are mine; paragraph breaks added by me):

Economic activity in the manufacturing sector expanded in October for the 34th consecutive month, and the overall economy grew for the 77th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

… The October PMI® registered 50.1 percent, a decrease of 0.1 percentage point from the September reading of 50.2 percent. The New Orders Index registered 52.9 percent, an increase of 2.8 percentage points from the reading of 50.1 percent in September. The Production Index registered 52.9 percent, 1.1 percentage points above the September reading of 51.8 percent.

The Employment Index registered 47.6 percent, 2.9 percentage points below the September reading of 50.5 percent. Backlog of Orders registered 42.5 percent, an increase of 1 percentage point from the September reading of 41.5 percent.

The Prices Index registered 39 percent, an increase of 1 percentage point from the September reading of 38 percent, indicating lower raw materials prices for the 12th consecutive month. The New Export Orders Index registered 47.5 percent, up 1 percentage point from September, and the Imports Index registered 47 percent, down 3.5 percentage points from the September reading of 50.5 percent.

Comments from the panel reflect concern over the high price of the dollar and the continuing low price of oil, mixed with cautious optimism about steady to increasing demand in several industries.”

Of the 18 manufacturing industries, seven are reporting growth in October in the following order: Printing & Related Support Activities; Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Chemical Products; Paper Products; and Fabricated Metal Products. The nine industries reporting contraction in October — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Petroleum & Coal Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Machinery; Transportation Equipment; Wood Products; and Computer & Electronic Products.

Let’s summarize:

• More industries are contracting than aren’t.
• Backlog of Orders has cratered for two straight months in the low-40s, i.e., contracting seriously two months in a row.
• None of the five expanding metrics is above 53.0. (To be fair, two of them, Production and New Orders, which both would foreshadow GDP pickups, increased nicely.)
• Six of the 11 metrics are in contraction (i.e., below 50.0).
• The expanding metrics average 51.5.
• The contracting metrics average 45.0.
• And the overall result is a teeny-tiny net … expansion?

This is very suspect.

Zero Hedge notes that “the employment sub-index at its lowest since August 2009″ — just after the recession officially ended.