Heads up! We are minutes away from the release of the final results of Markit's October U.S. Purchasing Managers Index survey, due out at 8:58 AM ET.
Economists predict the index fell to 51.1 in October from September's 52.8 reading, in line with preliminary survey results published by Markit on October 24.
The most notable item in the preliminary release was the manufacturing output sub-index, which plummeted to 49.5 from September's 55.3 reading. Numbers below 50 on the index indicate varying rates of decline while numbers above 50 indicate varying rates of increase, so the flash reading suggested that this month, American manufacturing experienced its first contraction in manufacturing output since September 2009.
And the culprit was all domestic demand, according to survey respondents.
"A number of manufacturers linked lower levels of output to a weaker trend for new orders," said Markit in the release. "Incoming new work increased modestly in October, but at the slowest rate in six months. The easing in the rate of total new order growth generally reflected weaker domestic demand, according to panellists."
Backing claims that lackluster domestic demand was driving the slowdown was the fact that new export orders actually rose in October after falling in September.
Most economists are quick to dismiss the effects of the shutdown on the economy, but Markit's flash
"The flash PMI provides the first insight into how business fared against the backdrop of the government shutdown in October, and suggests that the disruptions and uncertainty caused by the crisis hit companies hard," said Markit chief economist Chris Williamson. "The survey showed the first fall in manufacturing output since the height of the global financial crisis back in September 2009. We can expect GDP growth to have suffered a set-back in the fourth quarter, but it is too early to estimate the extent of the slowdown."
On Wednesday, the Federal Reserve failed to acknowledge the government shutdown in its October FOMC statement, an addition that was widely expected by economists across Wall Street.
The statement caused a sell-off in the Treasury market as investors priced in greater chances that the central bank could begin to taper down its quantitative easing program before its March meeting.
ISM's October Chicago Purchasing Managers Index unexpectedly surged to 65.9 from last month's 55.7 reading. The report caused another sell-off in the Treasuries on Thursday.
"In its narrative the organization says that businesses were 'seemingly unaffected by the [government] shutdown'," says Andrew Wilkinson, chief economic strategist at Miller Tabak. "In light of the Fed's failure to draw additional attention to the impact of the fiscal showdown in Washington, that message is likely to resonate with investors."
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