US Manufacturing Contraction Slows in November, Outlook Uncertain

• U.S. manufacturing contracted at a moderate pace in November, with orders growing for the first time in eight months and factories facing significantly lower prices for inputs.
• The improvement reported by the Institute for Supply Management (ISM) on Monday tracked similar increases in other sentiment surveys, which have risen on hopes of more business-friendly policies from the incoming Trump administration.
• Still, manufacturing is not out of the woods yet. ISM Manufacturing Business Survey Committee Chair Timothy Fiore noted that "production execution eased in November, consistent with demand sluggishness and weak backlogs," and that "suppliers continue to have capacity, with lead times improving but some product shortages reappearing." Economists agreed.
• The ISM said its manufacturing PMI rose to a five-month high of 48.4 from 46.5 in October, which was the lowest level since July 2023. A PMI reading below 50 indicates a contraction in the manufacturing sector, which accounts for 10.3% of the economy.
• Only three industries, including computer and electronic as well as electrical equipment, appliances and components reported growth. Among the 11 industries reporting contraction were transportation equipment, machinery, miscellaneous manufacturing, chemical products and primary metals.
• Some machinery manufacturers said a slowdown in construction "has created a surplus of finished goods, creating the need for an extra two weeks of shutdown over the Christmas holiday period." Fabricated metal products makers said customers were destocking, adding "the preliminary forecast for 2025 is down significantly."

(Source: Reuters)