Business index paints mixed picture of factory activity By Jeffry Bartash, MarketWatch WASHINGTON (MarketWatch) — Growth in the U.S. manufacturing sector decelerated in October as production and inventories declined, according to a closely followed index. The Institute for Supply Management said its manufacturing gauge dropped to 50.8% last month – just slightly above a 2011 low - from 51.6% in September. Economists surveyed by MarketWatch had expected the closely followed index to rise to 52.1%. Reading over 50% indicate more manufacturers are expanding instead of shrinking. Only eight of the 18 industries tracked by Tempe, Ariz.-based ISM reported growth in October, down from 12 in the prior month. The small drop in the main index stemmed mainly from a decline production and inventory levels. Production dipped to 50.1% from 51.2% while inventories sank 5.3 percentage points to 46.7%, the lowest level since June 2010. Yet the new orders index — a signal of future demand — rose to 52.4% from 51.2%. What’s more, prices paid for raw materials and supplies plunged 15 percentage points to 41.0%, the lowest point since April 2009. Falling costs are a big relief for manufacturers, who’ve struggled most of the year to cope with high commodity prices. Most companies also stuck to current hiring plans. The employment index was little changed, down 0.3 percentage points to 53.5%. The Labor Department is due to release its monthly jobs report on Friday.

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