The US manufacturing ISM dropped unexpectedly in October. The headline index fell from 51.6 to 50.8, while the consensus was looking for a slight improvement (to 52.0). The details show a more mixed picture. Production (50.1 from 51.2), inventories (46.7 from 52.0), customer inventories (43.5 from 49.0), new export orders (50.0 from 53.5) and imports (49.5 from 54.5) weakened in October, while new orders (52.4 from 49.6) improved somewhat and supplier deliveries (51.3 from 51.4) and employment (53.5 from 53.8) stayed broadly unchanged. Prices paid dropped significantly, falling from 56.0 to 41.0, the lowest level in 2.5 years. The weakness in the headline index was led by a significant decline in both inventories and customer inventories, while orders jumped above the 50 level. Overall however, the manufacturing ISM stayed broadly unchanged in over the last four months, hovering just above the 50 benchmark level, suggesting that the US manufacturing sector continues to show modest growth.