U.S. manufacturing contracts for ninth straight month as orders and employment weaken

U.S. manufacturing activity contracted again in November, marking the ninth consecutive month of decline, according to the latest Manufacturing PMI® from the Institute for Supply Management (ISM). The index fell to 48.2, down from 48.7 in October, signalling a deeper pullback in demand and employment even as production improved.

Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said the dip reflects “a faster rate of contraction” driven by weakening supplier deliveries, new orders and hiring. A PMI reading below 50 indicates contraction in the manufacturing sector.

The New Orders Index dropped to 47.4, its third month of contraction and two points lower than October, underscoring continued uncertainty among manufacturers. By contrast, production moved back into expansion territory, rising to 51.4 as firms worked through earlier backlogs.

Spence noted that improvements in one area continue to “show up a month later in another,” with stronger backlogs in October helping lift production in November. But she warned that declines in new orders and employment — both down two points — remain key drags on momentum.

The Employment Index slid to 44, the sharpest contraction since early autumn. According to Spence, two-thirds of manufacturers report managing headcounts rather than hiring, reflecting caution around forward demand.

Supplier deliveries accelerated, with the index falling to 49.3 — a sign that capacity is loosening. Inventories also contracted at a slower pace, rising to 48.9. Prices continued to increase, with the Prices Index edging up to 58.5.

Two of the four major demand components — new orders and backlogs — weakened, outweighing improvements in export orders and customers’ inventories. The New Export Orders Index rose to 46.2, while imports climbed to 48.9, both contracting at a slower rate.

Spence said customers’ inventories remain “too low,” a condition that traditionally supports future production, though overall demand remains subdued.

ISM estimates that 58% of manufacturing GDP contracted in November, matching October’s level. The share of the sector in “strong contraction,” defined by a composite PMI of 45 or lower, eased slightly to 39%.

Still, not all industries slumped. Of the six largest manufacturing sectors, three — Computer & Electronic Products; Food, Beverage & Tobacco Products; and Machinery — expanded in November.