US factories continued to see their business expand in October, but ongoing supply snarls connected to the pandemic including high employee turnover and shortages of needed materials held back growth, according to an industry survey released Monday.

The Institute for Supply Management (ISM) reported its manufacturing index dipped to 60.8 percent last month, slightly below the September reading but just above analysts' forecasts.

Businesses were overwhelmingly optimistic about the future, even as they dealt with the hangover caused by last year's Covid-19 restrictions, and the index remained above the 50-percent threshold indicating expansion for the 17th consecutive month, the survey said.

"Meeting demand remains a challenge, due to hiring difficulties and a clear cycle of labor turnover: As workers opt for more attractive job opportunities, panelists' companies and their suppliers struggle to maintain employment levels," ISM survey chair Timothy R Fiore said.

Other headwinds include virus-caused manufacturing disruptions in Southeast Asia, port congestion that has slowed down commerce in general and price increases amid an ongoing wave of inflation caused by the economy's vaccine-driven reopening.

Inflation, supply shortages and labor turnover continued as headwinds to US factories' momentum in October
Inflation, supply shortages and labor turnover continued as headwinds to US factories' momentum in October GETTY IMAGES NORTH AMERICA / BILL PUGLIANO

Imports slipped into contractionary territory last month with a 5.8 percentage point decrease to 49.1 percent, according to the data.

Elsewhere in the data, new orders dropped nearly seven points to 59.8 percent, production declined slightly and prices climbed about five points to 85.7 percent.

"Business remains strong, with brisk incoming orders. We have become much more supply driven versus demand driven, due to shortages of labor, materials and freight," a furniture and related products firm told the survey, adding, "Costs continue to increase on all fronts, and we are considering our third price increase of the year for our customers."

Positive trends in the data include a nearly two-point jump in employment to 52 percent as factories add back staff shed during the pandemic's worst days, and increases in new export orders and inventories of just over one point.

Coronavirus