As American voters head to the polls, the country received some good economic news.
U.S. manufacturing activity accelerated in October, with new orders jumping to their highest level in nearly 17 years amid a shift in spending toward goods such as motor vehicles. The Institute for Supply Management (ISM) said that its index of national factory activity increased to a reading of 59.3 last month. That was the highest level since November 2018 and followed a reading of 55.4 in September.
The ISM survey was the last major economic data to come out before the presidential election. A reading above 50 indicates expansion in manufacturing, which accounts for 11.3% of the U.S. economy.
The U.S. economy is forecast to slow sharply in the fourth quarter after a historic 33.1% annualized rate of expansion in the July-September period. Economic growth last quarter, which followed a record 31.4% contraction in the April-June quarter, was juiced by more than $3 trillion in government pandemic relief. Government money has virtually run out and there is no deal in sight for another rescue package.
The coronavirus crisis has pulled spending away from services towards goods that complement the changed lifestyle. Spending on goods in the U.S. has now surpassed its pre-pandemic level.
The ISM’s forward-looking new orders sub-index surged to a reading of 67.9 last month, the highest reading since January 2004, from 60.2 in September. With orders booming, manufacturing employment expanded for the first time since July 2019. The ISM’s manufacturing employment gauge rose to a reading of 53.2 from 49.6 in September.
About 11.5 million of the 22.2 million jobs lost during the pandemic have since been recovered. The U.S. federal government is scheduled to publish October’s employment report on November 6.