Economy Still Rebounding, Survey of Purchasers Says

The economy entered the fourth quarter maintaining the strong rebound of September, the National Assn. of Purchasing Management said Sunday.

The rate of improvement in production last month was unchanged from the strong showing in September, the association said. New orders fell, however, slipping to the pace of June-August.

Inventories declined in October as manufacturers began making seasonal adjustments, the report said. Employment was somewhat improved from the previous two months, with the rate of decline slowing.

Vendor deliveries showed little change for the ninth consecutive month, and no items were reported in short supply. And, for the 11th consecutive month, more managers reported paying lower than higher prices.

“The favorable turnaround we saw in the economy in September was sustained in October. Perhaps the most impressive sign is that the economy continued its momentum in spite of the expected seasonal slowdown,” said Robert J. Bretz, director of purchasing at Pitney Bowes and chairman of the association’s business survey committee.

The association’s report is issued monthly. It is based on data compiled from replies to various questions asked of purchasing managers at 250 industrial companies.

The purchasing manager’s composite index rose to 51.7% in October from 51% in September. This was the second consecutive month the indicator was over 50% after registering a seven-month run under 50%. A reading below 50% generally indicates the economy is in a declining phase; above 50% indicates the economy is expanding, the association says.

After a significant rebound in September, new orders fell in October. The number of members reporting new orders as better was equal to those reporting a worse situation, duplicating the same flatness reported in June, July and August.

There was no change in production in October compared to September. However, considering normal seasonal adjustments, October’s rate was the highest since January, the report said.

The slowing in vendor deliveries reported by purchasers in September continued at about the same pace in October. The 6% reporting slower deliveries in October was a drop of three points from 9% in September, but the drop in those reporting faster delivery fell about the same.

The rate of inventory decline increased in October, a change from the three previous months, when only a slight decrease was reported.

For the second consecutive month, the rate of price decrease appears to be slowing. Some members said the effects of the weakening U.S. dollar was beginning to show up in higher import prices.