News

In November, the U.S. manufacturing sector contracted for the eighth consecutive month, with the ISM Manufacturing^® PMI rising to a five-month high at 48.4% from 46.5% the prior month, indicating activity contracted at a slower pace. The New Orders Index returned to expansion after seven months of contraction, registering 50.4%. Meanwhile, production (46.8%), inventories (48.1%) and backlog of orders (41.8%) remained in contraction, with production and inventories at slower rates of decline. The Inventories Index, although still low, rose 5.5 percentage points, the largest gain of the report. While there is not yet a concerted stockpiling effort, the increase in the index may be a reflection of companies being more willing to invest in inventory as a response to tariff threats. Supplier deliveries are no longer slowing, and although demand continues to be weak, companies have the benefit of some increased certainty with the election cycle ending.

Although the New Orders Index grew and is up 3.3 percentage points from October, the index hasn’t shown consistent growth since a 24-month streak of expansion ended in May 2022. Despite the slight upswing, respondents continue to note ongoing uncertainty and concern about a lack of new order activity, with three major sectors—computer and electronic products; machinery; and food, beverage and tobacco products—reporting an increase in new orders.

The Production Index remained in contraction in November but inched up 0.6 percentage points from October. Of the six largest manufacturing sectors, only two (computer and electronic products and food, beverage and tobacco products) reported increased production. While new order rates expanded somewhat, backlog levels continued to decline, leading to manufacturers reducing output.

The Employment Index is up 3.7 percentage points from October, contracting for the sixth consecutive month but at a slower pace. Companies continued to reduce headcounts through layoffs, attrition and hiring freezes, with only the food, beverage and tobacco products sector expanding employment in November.

The Prices Index fell 4.5 percentage points to 50.3%, indicating raw materials prices increased in November but at a slower pace than the month before. Aluminum, copper and natural gas registered slight increases, offset by steel, plastic resins and crude oil falling in price. Slightly more than 12% of companies reported paying higher prices, compared to nearly 20% in October.