US manufacturing’s recovery suffered a slight set-back last month but remains in growth, according to the latest Purchasing Managers’ Index from the Institute for Supply Management (ISM).
The PMI measured 53.5 in November; down 2.1 on October’s 55.6 year-to-date high. A reading above 50 intonates growth while a reading below 50 means contraction.
Employment growth also slowed in November to 50.8 percent which is 2.3 percentage points lower than the 53.1 percent reported in October. Production and prices both suffered hits to recovery pace as well but the pace for new orders increased.
Inventories fell 5.6 points to 41.3 percent as firms continued destocking initiatives.
Commenting, Cliff Waldman, economist for the Manufacturers Alliance (MAPI), warned that manufacturers should expect to continue to see the pace of recovery slow down now that the boost of inventory turn along and fiscal stimulation measures begins to wear off.
“Slower growth in the backlog of orders suggests that manufacturing growth will continue to be less than what would be expected in the wake of a deep recession, at least over the near term,” he said.
“In addition, the significantly more rapid contraction of inventories would indicate that the factory sector is still struggling to gain a sustainable post-recession growth path.”
“The clear turn in the U.S. and global economies has pulled manufacturing out of a deep slump. But a deleveraging U.S. consumer and an uneven global economic recovery will make it difficult for U.S. factory output to grow at the rate that is needed to absorb historic excess capacity anytime soon.”
Click here to read the ISM’s full PMI report for November and to view historical trends.