Economic activity in the manufacturing sector contracted in November for the eighth consecutive month and the 24th time in the last 25 months, according to the Institute for Supply Management’s (ISM) Manufacturing Report On Business. The report was issued by Timothy R. Fiore, chair of the ISM manufacturing business survey committee.
“The manufacturing PMI registered 48.4% in November, 1.9 percentage points higher compared to the 46.5% recorded in October. The overall economy continued in expansion for the 55th month after one month of contraction in April 2020. (A Manufacturing PMI above 42.5%, over a period of time, generally indicates an expansion of the overall economy.) The new orders index returned to expansion, albeit weakly, after seven months of contraction, registering 50.4%, 3.3 percentage points higher than the 47.1% recorded in October,” Fiore said. “The November reading of the production index (46.8%) is 0.6 percentage point higher than October’s figure of 46.2%. The prices index continued in expansion (or ‘increasing’) territory, registering 50.3%, down 4.5 percentage points compared to the reading of 54.8% in October. The backlog of orders index registered 41.8%, down 0.5 percentage point compared to the 42.3% recorded in October. The employment index registered 48.1%, up 3.7 percentage points from October’s figure of 44.4%.”
“The supplier deliveries index indicated faster deliveries, registering 48.7%, 3.3 percentage points lower than the 52% recorded in October. (Supplier deliveries is the only ISM Report On Business index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The inventories index registered 48.1%, up 5.5 percentage points compared to October’s reading of 42.6%,” Viore said. “The new export orders index reading of 48.7% is 3.2 percentage points higher than the 45.5% registered in October. The imports index remained in contraction territory in November, registering 47.6%, 0.7 percentage point lower than October’s reading of 48.3%.”
“U.S. manufacturing activity contracted again in November, but at a slower rate compared to last month. Demand continues to be weak but may be moderating, output declined again, and inputs stayed accommodative. Positive signs for demand include the (1) new orders index returning to expansion territory, (2) new export orders index increasing moderately (up 3.2 percentage points but still in contraction territory), (3) backlog of orders index dipping further into strong contraction territory and (4) customers’ inventories index indicating levels were only marginally above ‘too low,’” Fiore said. “Output (measured by the production and employment indexes) continued in contraction: employment shrunk, but at a much slower rate, and production took a small step in the right direction. Foundational industries like chemical products and fabricated metal products (that provide products and components across the manufacturing sector) continued to show weakness, indicating that recovery may still be two to three months away. Inputs — defined as supplier deliveries, inventories, prices and imports — generally continued to accommodate future demand growth, with inventories improving and suppliers continuing to improve delivery performance.”
“Demand remains weak, as companies prepare plans for 2025 with the benefit of the election cycle ending. Production execution eased in November, consistent with demand sluggishness and weak backlogs. Suppliers continue to have capacity, with lead times improving but some product shortages reappearing,” Fiore said. “Sixty-six percent of manufacturing gross domestic product (GDP) contracted in November, up from 63% in October. The share of manufacturing sector GDP registering a composite PMI calculation at or below 45% (a good barometer of overall manufacturing weakness) was 48% in November, a 2-percentage point increase compared to the 46% reported in October. Two of the six largest manufacturing industries — food, beverage and tobacco products; and computer and electronic products — expanded in November, the same number of industries as in October.”
The three manufacturing industries reporting growth in November are:
Food, beverage and tobacco products
Computer and electronic products
Electrical equipment, appliances and components
The 11 industries reporting contraction in November — in the following order — are:
Printing and related support activities
Plastics and rubber products
Chemical products; paper products
Transportation equipment
Fabricated metal products
Furniture and related products
Machinery
Nonmetallic mineral products
Miscellaneous manufacturing
Primary metals
