U.S. Flash PMI for October Could Have Been Worse

How bad was it? Well, the eurozone flash PMI came out this morning as well and the index reading was 51.5.

U.S. manufacturing output fell from 55.3 in September to 49.5 in October, the first October decline in four years, according to research firm Markit Economics, which conducts the survey. The decline was due in part to a drop in new orders, from 53.2 to 51.6. New orders continue expanding, just at a slower rate. New export orders rose marginally in October.

The bright spot has to be manufacturing employment, which rose from an index reading of 51.3 in September to 52.3 in October. Job growth is not only expanding, but expanding at a faster though still moderate rate, according to Markit.

Markit’s chief economist said that the flash U.S. PMI reading “provides the first insight into how business fared against the backdrop of the government shutdown in October, and suggests that the disruptions and uncertainty caused by the crisis hit companies hard.” And the effects will linger:

We can expect GDP growth to have suffered a setback in the fourth quarter, but it is too early to estimate the extent of the slowdown. It is impossible to disentangle the impact of the shutdown from other factors that might have been at play during the month, so equally impossible to judge the extent to which business might bounce back in November.