Economic activity in the manufacturing sector contracted in November for the first time since May 2020 after 29 consecutive months of growth, 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 November Manufacturing PMI® registered 49 percent, 1.2 percentage points lower than the 50.2 percent recorded in October. Regarding the overall economy, this figure indicates expansion for the 30th month in a row after contraction in April and May 2020. The Manufacturing PMI figure is the lowest since May 2020, when it registered 43.5 percent. The New Orders Index remained in contraction territory at 47.2 percent, 2 percentage points lower than the 49.2 percent recorded in October. The Production Index reading of 51.5 percent is a 0.8-percentage point decrease compared to October’s figure of 52.3 percent.”
“The Prices Index registered 43 percent, down 3.6 percentage points compared to the October figure of 46.6 percent; this is the index’s lowest reading since May 2020 (40.8 percent). The Backlog of Orders Index registered 40 percent, 5.3 percentage points lower than the October reading of 45.3 percent. The Employment Index returned to contraction territory (48.4 percent, down 1.6 percentage points) after being unchanged in October at 50 percent. The Supplier Deliveries Index reading of 47.2 percent is 0.4 percentage point higher than the October figure of 46.8 percent. Except for last month, the Supplier Deliveries Index hasn’t been at this level since February 2012 (47 percent).
The Inventories Index registered 50.9 percent, 1.6 percentage points lower than the October reading of 52.5 percent. The New Export Orders Index reading of 48.4 percent is up 1.9 percentage points compared to October’s figure of 46.5 percent. The Imports Index dropped into contraction territory at 46.6 percent, 4.2 percentage points below the October reading of 50.8 percent.”
Fiore continues, “The U.S. manufacturing sector dipped into contraction, with the Manufacturing PMI at its lowest level since the coronavirus pandemic recovery began. With Business Survey Committee panelists reporting softening new order rates over the previous six months, the November composite index reading reflects companies’ preparing for future lower output.
“Manufacturing contracted in November after expanding for 29 straight months. Panelists’ companies continue to judiciously manage hiring, other than October 2022, the month-over-month supplier delivery performance was the best since February 2012 when it registered 47 percent, and material lead times declined approximately 9 percent from the prior month, approximately 18 percent over the last four months. Managing head counts and total supply chain inventories remain primary goals. Order backlogs, prices and now lead times are declining rapidly, which should bring buyers and sellers back to the table to refill order books based on 2023 business plans.”
Sample survey respondents commented as follows:
- “General economic uncertainty has created a slowdown in orders as we approach the end of the year, and many of our key customers are reducing their capital expenditures spend.” [Machinery]
- “The market remains consistent: sales match expectations; there are concerns about the impact of rising interest rates on customers; most suppliers have recovered on labor, but some are still struggling; and inflation seems to have peaked, but commodity price decreases have not been passed through to us. Lots of unknowns regarding impact to the European Union from the Russia–Ukraine war and questions about customer behavior in 2023.” [Miscellaneous Manufacturing]
For more information: www.ismworld.org