U.S. Manufacturing Activity Contracted in November for First Time Since Pandemic Hit -- ISM
By Xavier Fontdegloria
Factory activity in the U.S. swung to contraction in November
for the first time since the Covid-19 pandemic brought the economy
to a near halt in spring 2020, suggesting the goods-producing
sector is struggling due to rapidly weakening demand, data from a
purchasing managers survey showed Thursday.
The Institute for Supply Management said its index of U.S.
manufacturing activity decreased to 49.0 in November from 50.2 in
October, the lowest reading since May 2020 and the first time since
then that it fell below 50, the threshold that separates expansion
The index came in below the 49.8 consensus forecast from
economists polled by The Wall Street Journal.
November's data reflects companies are preparing for future
lower output, said Timothy Fiore, chairman of the ISM Manufacturing
Business Survey Committee.
The U.S. factory sector has been cooling in the last few months
due to softer demand for goods as high inflation and rising
interest rates weighs on investment.
November's ISM data, which is based on a poll among
manufacturers across the U.S., signaled the contraction in activity
was driven mainly by a decline in new orders, work backlogs and
employment, while production rose only slightly.
The production index fell to 51.5 in November from 52.3 in
October, signaling modest output growth. The new orders index fell
to 47.2 from 49.2, pointing to a faster decline in new orders.
"Customer demand is softening, yet suppliers are maintaining
high prices and record profits," said one respondent from the
computer and electronic products sector.
The employment index fell to 48.4 from 50.0, in a sign that
firms on average shed jobs in November. "Panelists' companies
confirm that they are continuing to manage head counts through a
combination of hiring freezes, employee attrition, and now
layoffs," Mr. Fiore said.
The supplier deliveries index rose to 47.2 from 46.8, but
continued to indicate faster vendor lead times as supply-chain
bottlenecks ease. The prices index fell to 43.0 from 46.6, pointing
to a decrease in prices as inflation pressures abate.
"Order backlogs, prices and now lead times are declining
rapidly, which should bring buyers and sellers back to the table to
refill order books based on 2023 business plans," Mr. Fiore
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(END) Dow Jones Newswires
December 01, 2022 10:43 ET (15:43 GMT)
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