The Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) increased to 48.4 in November but remains in contraction territory for an eighth straight month. The index has now contracted for 24 of the past 25 months. The latest reading was better than the forecast of 47.7.
Here is an excerpt from the latest report:
Fiore continues, “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.’ (For more, see the Customers’ Inventories Index summary section.) 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. Sixty-six percent of manufacturing gross domestic product (GDP) contracted in November, up from 63 percent in October. The share of manufacturing sector GDP registering a composite PMI® calculation at or below 45 percent (a good barometer of overall manufacturing weakness) was 48 percent in November, a 2-percentage point increase compared to the 46 percent reported in October. Two of the six largest manufacturing industries — Food, Beverage & Tobacco Products; and Computer & Electronic Products — expanded in November, the same number of industries as in October,” says Fiore.
