GM workers react on October 25, 2019 after learning that UAW workers had voted to ratify a bargain with the automaker (JEFF KOWALSKY)

Washington (AFP) – The US manufacturing sector contracted for the third straight month in October, hit by the General Motors strike and Boeing’s woes but showed some signs of improvement, according to an industry survey released Friday.

Concerns about US trade conflicts with China and others remain a factor but have receded, according to the Institute for Supply Management’s monthly survey.

ISM’s monthly manufacturing index rebounded to 48.3 percent, slightly below expectations, but an improvement after the sharp drop in September to 47.8 percent.

The October reading indicates the sector is contracting but at a slower rate. Any reading below 50 indicates contraction.

In fact, the sector has been slowing for seven months and while the new orders component posted a healthy increase, rising 1.8 percentage points, production fell 1.1 points.

“Comments from the panel reflect an improvement from the prior month but sentiment remains more cautious than optimistic,” said Timothy Fiore, chair of ISM’s manufacturing survey.

He noted that the transportation equipment sector had the strongest contraction of the “big six” industries, with many survey respondents mentioning the 40-day GM strike — which ended a week ago — as well as Boeing’s travails with the 737 MAX, as the company continues to try to get that aircraft back in the skies after two deadly crashes.

Chemicals, which go into a lot of manufacturing sectors, also contracted strongly, he said.

“Global trade remains the most significant cross-industry issue,” Fiore said, but he told reporters that fewer survey respondents mention that as a major concern.

And the new export orders index jumped more than nine points, pushing just above the key 50 percent threshold indicating growth.

However, companies are raising red flags about employment, even though the index increased 1.4 percentage points in the latest month.

Fiore said he has been tracking the issue, including comments about halting future hiring or not replacing retirees, and they have nearly doubled since August.

“If demand is weak, there are only three things you can push on,” and since firms have already scaled back on raw materials they now are making a “reassessment of manpower needs,” he said.

Economist Mickey Levy of Berenberg Capital Markets said the ISM report showed not all was well.

“Juxtaposed with today’s strong Employment Report and the sustained solid growth in domestic consumption, this weak manufacturing ISM report highlights the uneven mix of economic performance in the US,” he said in a client note.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.