The ISM Manufacturing Index ticked down by 0.3 points in October to remain near one of the highest readings of the past 50 years. Manufacturers are reporting that customer demand continues to be strong, yet this has amplified challenges in the supply chain. This is evidenced by the fact that the Prices Paid component has reaccelerated after a brief reprieve, while Customer Inventories came in unchanged to remain near the lowest level on record (bottom two graphs). In short, the recipe for continued pricing pressures still exists; however, strength in this leading manufacturing gauge is a vote of confidence for the economy and a valid reason for giving the current bull market the benefit of doubt.
