Manufacturing Sector Approaches Stability in November: PMI Report
Manufacturing Sector Approaches Stability in November: PMI Report
In November, the U.S. manufacturing sector signaled stability according to S&P Global's U.S. Manufacturing Purchasing Managers' Index (PMI) report. The PMI index rose to 49.7 as the pace of decline in new orders slowed. This increase points to improved demand conditions following Donald Trump's re-election as president. The PMI data released by the Institute for Supply Management (ISM) came in at 48.4, representing a 1.9-point increase from October. According to ISM data, new orders climbed to 50.4, entering growth mode for the first time since March.
\nA PMI reading below 50.0 signals economic contraction, while S&P Global's report noted that the manufacturing sector "approached stability" last month and that input cost inflation fell to its slowest pace in a year. As companies maintain growth plans under the Trump administration, Chris Williamson, chief economist at S&P Global Market Intelligence, observed the widest manufacturing gap in a decade outside the pandemic and emphasized the stark contrast between current challenging conditions and expectations for better times ahead.
\nIn November, three manufacturing sectors recorded growth, according to the ISM report: food, beverages and tobacco products; computer and electronic products; and electrical equipment, appliances and components. Meanwhile, 11 sectors experienced contraction, including printing and support activities, plastics and rubber products, chemical products, paper products, transportation equipment, fabricated metal products, furniture and related products, machinery, nonmetallic mineral products, miscellaneous manufacturing, and primary metals.
\nProduction showed modest growth as demand moderated, with the PMI index rising to 46.8 and employment increasing to 48.1. Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, noted that companies are able to make investment decisions more clearly as post-election policies become clearer. On the supply side, November saw improvements in delivery times, with inventories, prices, and imports signaling future demand increases.
\nFiore stated that manufacturers are optimistic that the incoming Trump administration will be supportive, though uncertainties surrounding tariffs have created some concern in the sector. Economists argue that tariffs could raise inflation, with manufacturers viewing this as a future challenge. Fiore said, "Business evaluated the Republican victory and plans to address inflation potential down the road. In the meantime, we should be entering a new growth period."
\nISM panelists indicated they expect to return to growth mode in the coming months. A respondent from the transportation equipment sector said, "Things are moving slowly. We hope the first half of 2025 will be similar and demand will pick up in the second half of 2025."
\nKey Takeaways:
\n- \n
S&P Global's PMI index rose to 49.7 in November.
\n ISM's PMI index came in at 48.4.
\n Three sectors recorded growth while 11 sectors contracted.
\n Input cost inflation fell to its lowest level in a year.
\n Manufacturing employment rose to 48.1.
\n Improving delivery times were observed, signaling future demand increases.
\n The inflation risk that tariffs could pose is being evaluated as a future concern.
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\nNews Link: https://www.supplychaindive.com/news/pmi-november-2024-donald-trump-tariffs-demand-layoffs/734316/
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