Manufacturing sector contracted at faster pace in November

by Talk Business & Politics staff (staff2@talkbusiness.net) 78 views 

The Purchasing Managers’ Index (PMI) fell 0.2 percentage points to 48.1% in November, from October, as economic activity in the manufacturing sector contracted for the fourth consecutive month and at a faster rate than in October, according to the Institute for Supply Management (ISM). A reading above 50% indicates the manufacturing economy is expanding and below 50% indicates it’s contracting.

The ISM released Monday (Dec. 2) the Manufacturing ISM Report on Business for November.

The new orders index fell 1.9 percentage points to 47.2% in November, from October. The production index rose 2.9 percentage points to 49.1%. The backlog of orders index fell 1.1 percentage points to 43%. The employment index decreased by 1.1 percentage points to 46.6%. The supplier deliveries index rose 2.5 percentage points to 52%. The inventories index declined 3.4 percentage points to 45.5%. The prices index rose 1.2 percentage points to 46.7%. The new export orders index decreased by 2.5 percentage points to 47.9%. The imports index increased 3 percentage points to 48.3%.

The overall economy grew for the 127th consecutive month with the GDP rising at 1.5%.

Comments from the panel surveyed for the report were similar to the previous month with sentiment improving from October, the report showed. Demand contracted, and the new orders index declined at a faster rate. The customers’ inventories index was at too low levels, and the backlog of orders index fell for the seventh consecutive month and at a faster rate. The decrease in the new export orders index likely contributed to the faster decline in the new orders index. Consumption, which is measured by the production and employment indexes, declined as a result of a lack of demand but accounted for a combined 1.8-percentage point increase to the PMI.

Inputs, which include supplier deliveries, inventories and imports, fell in November as a result of a decline in inventories, but this was partially offset by supplier deliveries returning to slowing. The result was a combined 0.9-percentage point decline in the supplier deliveries and inventories indexes. Imports contracted at a lower rate. Overall, inputs show that supply chains are meeting demand and companies are less confident that materials received will be consumed in a reasonable amount of time. Prices fell for the sixth consecutive month but at a lower rate.

The most significant issue across the manufacturing sector remained global trade. Food, beverage and tobacco products remained the strongest industry in the sector, while the fabricated metal products industry was the weakest. Overall, sentiment in November was neutral with regard to near-term growth.

The following five manufacturing industries reported growth in November: apparel, leather and allied products; food, beverage and tobacco products; paper products; miscellaneous manufacturing; and computer and electronic products. The following 13 industries reported contraction in November: wood products; printing and related support activities; furniture and related products; textile mills; fabricated metal products; transportation equipment; primary metals; plastics and rubber products; petroleum and coal products; nonmetallic mineral products; machinery; chemical products; and electrical equipment, appliances and components.

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