ISM Manufacturing Index Contracts for 13th Straight Month

The Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) remained at 46.7 in November. The latest figure marks the 13th straight month the index has been in contraction territory after a 29-month period of growth dating back to June 2020. The November reading was below the forecast of 47.6.

Here is an excerpt from the latest report:

Fiore continues, “The U.S. manufacturing sector continued to contract at the same rate in November as compared to October, again posting a reading of 46.7 percent. Companies are still managing outputs appropriately as order softness continues. Demand eased, with the (1) New Orders Index contracting but at a slower rate, (2) New Export Orders Index dropping further into contraction territory, and (3) Backlog of Orders Index dropping below 40 percent (39.3 percent) to remain in strong contraction territory. The Customers’ Inventories Index reading moved into expansion, toward the upper end of ‘about right’ territory, not accommodative for future production. Output/Consumption (measured by the Production and Employment indexes) was negative, with a combined 2.9-percentage point downward impact on the Manufacturing PMI® calculation. Panelists’ companies slightly reduced month-over-month production and took more actions to reduce head counts, primarily using layoffs and attrition. Inputs — defined as supplier deliveries, inventories, prices and imports — continued to accommodate future demand growth. The Supplier Deliveries Index indicated faster deliveries for the 14th straight month, at a faster rate compared to October, and the Inventories Index moved upward while remaining in moderate contraction territory. The Prices Index remained in ‘decreasing’ territory (but just barely), signifying price stability as a result of energy markets easing, though offset by increases in the steel markets. Manufacturing supplier lead times continue to decrease, a positive for future economic activity."