The manufacturing industry was a dismal sight in October as it failed to grow for the third consecutive month, says the latest Report on Business from the Institute for Supply Management (ISM) this week.

The October ISM index was at 38.9 — the lowest level since September 1982 — and a far cry from neutral reading of 50.

Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, told Agence France-Presse (via IndustryWeek):

Manufacturing activity has been falling (in terms of the Federal Reserve's industrial production) since October 2007, but in the last two months business activity fell off a cliff. Hurricane Ike and the Boeing strike contributed to the sharp downturn, but the breadth of production losses across industries shows that there is a more fundamental explanation; the U.S. economy is deleveraging. ... A retrenchment in housing, motor vehicles and discretionary consumer goods and services is the result of the consumer sector being squeezed. Unfortunately, falling consumer demand creates unemployment and self reinforcing downturns across the industrial landscape.

In accordance to falling demand, ISM's new orders index registered 32.2 in October, 6.6 points lower than the 38.8 registered in September. The production index shrank to 34.1, down from the 40.8 reported in September. Employment also decreased by 7.2 points to 34.6 percent last month.

New export orders, which have kept manufacturers afloat until August, dwindled from 52 to 41 points in October. In turn, U.S. manufacturers imported less last month, posting 41 on the imports index in comparison to the 44 reading in September.

However, it's not exclusively the U.S. manufacturing industry facing hugely tough times.

Even China's prosperous manufacturing industry came to a staggering halt in October when the Purchasing Managers' Index (PMI) by CSLA brokerage gave a reading of 45.2. This was the lowest reading since 2004 and is 2.5 down from September. The overall output index stood at 43.4, a drop of 3.3 from September.

The CSLA numbers reflected that of the Chinese government's figures, released over the weekend, the index of which read 44.6 for October. "It confirms the delayed but strong reaction in China to the credit crisis," the Telegraph reports. "Its financial system has held up, largely insulated by government controls on the currency and the banking system, but it is being badly hit by the collapse in consumer confidence in its key export markets."

Across the Atlantic, British manufacturers are facing grim conditions as well, as the Chartered Institute of Personnel and Development (CIPD) and Markit's PMI posted 41.5 for October. Though slightly better than September's 41.2 reading, BBC News notes, the improvement did not assuage economists' and manufacturers' fears.

Howard Archer, chief economist at Global Insight, said to the Telegraph:

The best thing that can be said about the October manufacturing purchasing managers' survey is that it was not quite as dire as feared. Nevertheless, this is still an extremely weak survey across the board that does little to dilute fears that the UK could suffer an extended, deep recession.

In the U.K., domestic demands remained depressed and new export orders continued slumping. British manufacturers were unable to cope by raising prices as the lack of demand restricted that ability. However, the price manufacturers had to pay for raw materials did drop to a 39-month low.

The financial crisis has uniformly weakened the global economy and the manufacturing sector has been squeezed in the process.

With last night's election of Barack Obama as the 44th U.S. president, political and business leaders around the world will be looking to the president-elect to help lead the nation out of the worst global financial crisis since the 1930s.

"We need to change the current crisis into a new opportunity. We need a new deal for a new world," European Commission President Jose Manuel Barroso said to Reuters. "I sincerely hope that with the leadership of President Obama, the United States of America will join forces with Europe to drive this new deal."

Addressing more than 200,000 people who waited in Chicago's Grant Park, the first African-American president-elect sang of the nation's progress over the last century while at the same time promising "a new dawn of American leadership" overseas.

For Obama's ideas on five key economic issues, go HERE.

How do you think Obama will handle the economic crisis and how will that affect the manufacturing industry?

Resources

October 2008 Manufacturing ISM Report on Business®
Institute for Supply Management, Nov. 3, 2008

Manufacturing Plunges to Lowest Level in 26 Years
Agence France-Presse, Nov. 3, 2008

Obama Victory Met with Calls for Global Action
by Daniel Trotta
Reuters, Nov. 5, 2008

China's Manufacturing Juggernaut Feels Pain of Global Slowdown
by Richard Spencer
The Telegraph, Nov. 3, 2008

UK Manufacturing Shrinks Again
BBC News, Nov. 3, 2008

UK Manufacturers Face 'Brutal' Conditions According to PMI Report
by Angela Monaghan
The Telegraph, Nov. 3, 2008

What Obama Stands For on Economy
by Jeanne Sahadi
CNNMoney.com, Nov. 5, 2008