A report from the Institute for Supply Management (ISM) showed on Friday the U.S. manufacturing sector’s activity contracted in October.

The ISM's index of manufacturing activity came in at 48.3 percent last month, up 0.5 percentage point from the September reading of 47.8 percent, but missed economists' forecast for a 48.9 percent reading. 

A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

According to the report, the Production Index came in at 46.2 percent, down 1.1 percentage points from the September reading, the Deliveries Index registered 49.5 percent, a 1.6-percentage point decrease from the September reading, and the Prices Index recorded 45.5 percent, a 4.2-percentage point decrease from the September reading of 49.7 percent. At the same time, the New Orders Index stood at 49.1 percent, up 1.8 percentage points from the September reading, the Employment Index registered 47.7 percent, a 1.4-percentage point increase from the September reading, and the Inventories Index recorded 48.9 percent, an increase of 2 percentage points from the September reading.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee said, “The past relationship between the PMI and the overall economy indicates that the PMI for for October (48.3 percent) corresponds to a 1.6-percent increase in real gross domestic product (GDP) on an annualized basis."