ISM Report: Manufacturing PMI Falls Slightly to 48.2% in November

The ISM (Institute for Supply Management) Manufacturing PMI decreased to 48.2% in November, marking the ninth consecutive month of contraction. This figure is 0.5 points below the October reading of 48.7%, indicating contraction at a faster rate in the manufacturing sector.

“Of the five subindexes that directly factor into the Manufacturing PMI, one is in expansion territory, the same number as in October,” says Susan Spence, chair of the ISM’s manufacturing business survey committee. Anything lower than 50% represents contraction.

The production index entered expansion territory with a November reading of 51.4%, a 3.2-point increase from the previous month.

The new orders and employment indexes both fell two points to 47.4% and 44%, respectively.

“Regarding output, production jumped into expansion, but employment contracted at a faster pace, as 67% of panelists (the same as October) indicated that managing head counts is still the norm at their companies, as opposed to hiring,” Spence says.

Four manufacturing industries reported growth in November:

• Computer & electronic products
• Food, beverage & tobacco products
• Miscellaneous manufacturing
• Machinery

“Of the six largest manufacturing industries, three (computer & electronic products; food, beverage & tobacco products; and machinery) expanded in November,” Spence says.

The comments of the survey continue to emphasize business challenges and caution due to trade policy, prices and the recent government shutdown.

“We are starting to institute more permanent changes due to the tariff environment,” writes a respondent from the transportation equipment sector. “This includes reduction of staff, new guidance to shareholders and development of additional offshore manufacturing that would have otherwise been for U.S. export.”

Another respondent in the electrical equipment, appliances & components sector writes, “Conditions are more trying than during the coronavirus pandemic in terms of supply chain uncertainty.”