Manufacturing activity in the United States grew at its slowest rate in over two and a half years in October, while a gauge of prices paid by businesses for inputs fell for the seventh consecutive month, as the Federal Reserve’s relentless campaign to raise interest rates in order to combat inflation.
Manufacturing purchasing managers’ index (PMI) dropped to 50.2 last month, from 50.9 in September, according to the Institute for Supply Management (ISM) on Tuesday. This is the lowest PMI level since May 2020.
An increase above 50 indicates growth in the manufacturing sector, which contributes 11.9% to the GDP of the U. S.. Reuters’ poll of economists anticipated a drop in the index to 50.0.
The Federal Reserve is scheduled to announce its policy statement on Wednesday (Nov. 2), and investors will be watching closely for any hint that policymakers are considering slowing the pace of rate hikes.
The market expects the Fed to raise its benchmark overnight interest rate by 75 basis points (bps), bringing it to a range of 3.75% to 4.00%.
However, investors are divided on how much of a hike to expect in December, with the futures market putting in a 44.5% chance of a 50-bps increase.
