According to the US Institute for Supply Management, manufacturing growth in the United States slowed last month. The Purchasing Managers’ Index PMI fell to 50.1 in October from 50.2 in September (a figure above 50 indicates growth).

This is the lowest reading since May 2013 and marks the fourth decline in a row. There was a pick-up in growth in new domestic orders, with the index increasing 2.8 points to 52.9. Production also grew at a faster rate, but employment fell sharply and the backlog of orders continued to decline.

Daniel Meckstroth, chief economist for the Manufacturers’ Alliance for Productivity and Innovation (MAPI) Foundation, said that activity is abnormally weak, and adding that “an inventory problem is evident in the report, as both firms and their customers are reducing inventory.

This draw-down is a symptom of slow production growth and the deflation that is rampant within the goods-producing industries.

“Falling prices create a financial loss on inventory held, so the incentive is to lower inventory as quickly as possible. Deflation in commodity prices is good for consumers, but it causes declining investment spending in the extraction and processing industries.” Mr Meckstroth went on to say that imports are falling faster than exports.

“Foreign trade will be a major drag on manufacturing activity and the general economy this year and over the next two.”

The MAPI Foundation economist quoted a manager in the chemical products sector, who said: “Currency exchange is having a large impact on business results. Another worry is the continuing low price of oil, which has led companies to scale back production, pushing a slowdown in related industries.”

Mr Meckstroth added: “The October PMI implies that manufacturing production is going through an inventory adjustment. We believe that there is moderate, sustainable growth in consumer spending that will drive modest and accelerating economic and manufacturing production growth in 2016 and 2017.”