New Orders Growing and Backlogs Contracting; Production and Employment Contracting; Supplier Deliveries Faster; Raw Materials Inventories Contracting; Customers’ Inventories Too Low; Prices Increasing; Exports and Imports Contracting
TEMPE, Ariz., Dec. 2, 2024 /PRNewswire/ — Economic activity in the manufacturing sector contracted in November for the eighth consecutive month and the 24th time in the last 25 months, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:
“The Manufacturing PMI® registered 48.4 percent in November, 1.9 percentage points higher compared to the 46.5 percent 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 percent, 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 percent, 3.3 percentage points higher than the 47.1 percent recorded in October. The November reading of the Production Index (46.8 percent) is 0.6 percentage point higher than October’s figure of 46.2 percent. The Prices Index continued in expansion (or ‘increasing’) territory, registering 50.3 percent, down 4.5 percentage points compared to the reading of 54.8 percent in October. The Backlog of Orders Index registered 41.8 percent, down 0.5 percentage point compared to the 42.3 percent recorded in October. The Employment Index registered 48.1 percent, up 3.7 percentage points from October’s figure of 44.4 percent.
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“The Supplier Deliveries Index indicated faster deliveries, registering 48.7 percent, 3.3 percentage points lower than the 52 percent recorded in October. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Inventories Index registered 48.1 percent, up 5.5 percentage points compared to October’s reading of 42.6 percent.
“The New Export Orders Index reading of 48.7 percent is 3.2 percentage points higher than the 45.5 percent registered in October. The Imports Index remained in contraction territory in November, registering 47.6 percent, 0.7 percentage point lower than October’s reading of 48.3 percent.”
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.
The three manufacturing industries reporting growth in November are: Food, Beverage & Tobacco Products; Computer & Electronic Products; and Electrical Equipment, Appliances & Components. The 11 industries reporting contraction in November — in the following order — are: Printing & Related Support Activities; Plastics & Rubber Products; Chemical Products; Paper Products; Transportation Equipment; Fabricated Metal Products; Furniture & Related Products; Machinery; Nonmetallic Mineral Products; Miscellaneous Manufacturing; and Primary Metals.
Read full release: ISM
SOURCE: ISM
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