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American Manufacturing’s Mixed Signals

apparel factory cloud

Is the Made in U.S.A. movement flowering or failing? It depends who you ask.

Conflicting data on the country’s manufacturing sector has emerged, with the Institute for Supply Management’s (ISM) purchasing managers index (PMI) reporting Monday that U.S. factory activity expanded at its slowest pace in more than two years in October, while financial information services firm Markit Economicsnumbers released the same day said production was at a six-month high.

ISM said PMI fell to 50.1 from September’s 50.2 reading, indicating that though the sector is expanding (anything above the threshold of 50 implies growth), it’s sluggish.

“We’re not in a robust growth mode,” Bradley Holcomb, who oversees the ISM survey, told The Wall Street Journal, pointing out that while new orders are up, the employment index has dropped to its lowest level since August 2009.

Markit’s data, meanwhile, signaled a turnaround in growth momentum, up from 53.1 to 54.1, revealing a rise in new work from overseas for the third month in a row and a rebound in jobs from a 27-month low recorded in September.

“Stronger manufacturing growth in October brings encouraging news after the sector saw the pace of expansion slump to a two-year low in the third quarter,” said Chris Williamson, chief economist at Markit. “Factory output growth accelerated, equivalent to around a 4 percent annualized rate of increase, as firms saw the largest monthly jump in new order inflows since March. Export growth has also revived, suggesting firms are managing to adapt to the stronger dollar, as job creation picked up after slowing in September.”

However, Moody’s Investor Service has lowered its outlook for the North American manufacturing sector, moving from stable to negative on weakening demand in key end markets.

“Almost two-thirds of the segments served by our rated companies are approaching negative territory,” commented Chris Wimmer, a Moody’s vice president and senior credit officer. “And we see no growth catalysts on the horizon that would improve business prospects for the sector.”

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According to the report titled “North American Manufacturing Changing Outlook to Negative on Flat Growth, Weakness in Key Markets,” manufacturers are likely to reduce costs and delay investment.

Wimmer added, “Only two segments in the North American manufacturing sector face strong growth prospects. The commercial aerospace segment will benefit from strong demand from commercial airlines, and the HVAC segment from the transition to the new seasonal energy efficiency ratio requirements.”

Moody’s isn’t alone in its change of heart—it would appear American manufacturing doesn’t carry much weight with the 2016 U.S. presidential candidates.

The National Association of Manufacturers (NAM) on Monday canceled its discussion on domestic production after only two Republication contenders, Rick Santorum and Carly Fiorina, signed on to attend.