US manufacturing activity contracted slightly as expected in October, but still continued to expand for the ninth consecutive month, according to a key survey out today. The Institute for Supply Management said its index of manufacturing activity fell to 50.9 in October, from 52.0 in September. Analysts were looking for a more modest decline to 51.8. The survey said the new orders index fell to 52.5 from 53.4, while the production index fell to 49.6 from 54.6. The drop in the production index breaks an eight-month trend in expanding production. Inflation pressure rose in October, as the prices paid index rose to 63.0 from 59.0. ISM's Norbert Ore said manufacturing growth has now slid to its lowest level since March 2007, and said problems in the housing and credit markets appear to be affecting manufacturing. "It does appear that the impact of the slow down in the financial, housing and transportation segments has spilled over into manufacturing with the exception being continued strength in new export orders," he said.