U.S. Manufacturing Growth Slows in November

Dec. 1, 2009
New orders rose 1.8% in November

The U.S. manufacturing sector expanded for a fourth month running in November but at a slower pace than expected. The Institute for Supply Management reported on Dec. 1 that its manufacturing index fell to 53.6% from 55.7% in October.

The slowdown was sharper than the average analyst forecast of a 55% reading.

"While the November manufacturing report indicates that the U.S. factory sector continues to enjoy recovery from a deep six-quarter contraction, this report, along with other recent data, suggests that the pace of output growth will slow from the relatively rapid clip seen in the third quarter, much of which was catalyzed by an inventory turn along with a number of short-term fiscal stimulus programs," said Cliff Waldman, Economist for the Manufacturers Alliance/MAPI.

"The overall index remained above the critical 50%t line, which separates growth from contraction, but fell back from the October level as output grew at a slower rate. Slower growth in the backlog of orders suggests that manufacturing growth will continue to be less than what would be expected in the wake of a deep recession, at least over the near term.

"In addition, the significantly more rapid contraction of inventories would indicate that the factory sector is still struggling to gain a sustainable post-recession growth path," he added. "The clear turn in the U.S. and global economies has pulled manufacturing out of a deep slump. But a deleveraging U.S. consumer and an uneven global economic recovery will make it difficult for U.S. factory output to grow at the rate that is needed to absorb historic excess capacity anytime soon."

The monthly ISM survey found new orders rose 1.8% in November and continued but slower growth in production and employment.

The overall U.S. economy grew for the seventh consecutive month, according to the survey of the nation's supply executives.

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