Investing.com - Manufacturing activity in the Chicago-area fell more than expected in October, hitting a five-month low and dampening optimism over the U.S. economic outlook, industry data showed on Monday.
In a report, the Institute for Supply Management (ISM) said its Chicago purchasing managers’ index decreased by 3.6 points to a seasonally adjusted 50.6 this month from a reading of 54.2 in September. Analysts had expected the index to drop 0.2 points to 54.0 in October.
On the index, a number above 50.0 indicates an expansion, while below indicates contraction.
The latest outturn marked a “weak start to fourth quarter”, with the three-month trend softening to 52.1 in October from 53.8 in the three months to September, the ISM indicated.
According to the report, the Barometer decline was led by a slowdown in Production, which fell 5.4 points to 54.4, giving up most of the gain seen last month but remaining above the 2016 average.
New Orders also subtracted from the Barometer, falling to the lowest level since May.
The ISM noted that Order Backlogs increased slightly, but failed to jump out of contraction territory, where they have been over the past three months.
Employment saw a smaller rise, edging back above the 50-breakeven level and recovering some of the lost ground experienced in the previous month.
Meanwhile, Supplier Deliveries fell to the lowest level since June.
“A key takeaway from the latest survey was the pick-up in Prices Paid to a nearly two-year high," said Lorena Castellanos, senior economist at MNI Indicators that helps elaborate the data.
"Inflationary pressures are on the rise, which is one of the metrics the Federal Reserve has been waiting for to increase rates," she warned.
"However, economic growth ahead, as read by the October Chicago Business Barometer, looks very disappointing," Castellanos added.
After the report, EUR/USD was trading at 1.0942 from around 1.0948 ahead of the release of the data, GBP/USD was at 1.2152 from 1.2159 earlier, while USD/JPY was at 105.04 from 105.03 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 98.62 from 98.57 previously.
Meanwhile, U.S. stock markets were slightly higher after the open. The Dow 30 inched up 0.02%, the S&P 500 rose 0.23%, while the Nasdaq Composite traded up 0.30%.
Elsewhere, in the commodities market, gold futures traded at $1,273.50 a troy ounce, compared to $1,273.55 ahead of the data, while crude oil traded at $47.92 a barrel from $48.07 earlier.