Continuing its year-long downward trajectory, the Institute for Supply Management’s monthly Purchasing Managers Index (PMI) — a well-regarded barometer of the U.S. industrial economy — fell into contraction territory in November for the first time since the height of the COVID-19 pandemic.
The November PMI mark of 49.0% was 1.2 percentage points lower than October and was the first contraction reading since May 2020 — snapping 29 straight months of expansion (anything above 50.0 or above). It was also the lowest mark since May 2020’s 43.5%, and the index’s eighth consecutive month-to-month decline.
After carrying strong momentum to the end of 2021 and holding in the high 50s the first couple months of 2022, the PMI has steadily decreased since. It slid to 53.0 in June and 50.9 in September and has since fallen further. A year ago, November’s PMI registered at 60.6.
“The U.S. manufacturing sector dipped into contraction, with the Manufacturing PMI at its lowest level since the coronavirus pandemic recovery began,” noted Timothy Fiore, CPSM, C.P.M. and chair of the ISM Manufacturing Business Survey Committee. “With Business Survey Committee panelists reporting softening new order rates over the previous six months, the November composite index reading reflects companies’ preparing for future lower output.”
|Month||Manufacturing PMI||Month||Manufacturing PMI|
|Nov 2022||49.0||May 2022||56.1|
|Oct 2022||50.2||April 2022||55.4|
|Sep 2022||50.9||March 2022||57.1|
|Aug 2022||52.8||Feb 2022||58.6|
|July 2022||52.8||Jan 2022||57.6|
|June 2022||53.0||Dec 2021||58.8|
|Average for 12 months – 54.4; High – 58.8; Low – 49.0|
Six of the 18 manufacturing industries ISM tracks reported growth in November, compared to 10 in October. The growth industries in November, were in the following order: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Primary Metals; Miscellaneous Manufacturing; Petroleum & Coal Products; and Transportation Equipment.
The 12 industries reporting contraction in November were in the following order: Printing & Related Support Activities; Wood Products; Paper Products; Textile Mills; Fabricated Metal Products; Furniture & Related Products; Chemical Products; Plastics & Rubber Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Machinery; and Electrical Equipment, Appliances & Components.
MANUFACTURING AT A GLANCE
|Index||Series Index Nov||Series Index Oct||Percentage Point Change||Direction||Rate of Change||Trend* (Months)|
|Manufacturing PMI®||49.0||50.2||-1.2||Contracting||From Growing||1|
|Customers’ Inventories||48.7||41.6||+7.1||Too Low||Slower||74|
|Backlog of Orders||40.0||45.3||-5.3||Contracting||Faster||2|
|New Export Orders||48.4||46.5||+1.9||Contracting||Slower||4|
|Manufacturing Sector||Contracting||From Growing||1|
“Panelists’ companies continue to judiciously manage hiring, other than October 2022, the month-over-month supplier delivery performance was the best since February 2012, when it registered 47 percent and material lead times declined approximately 9 percent from the prior month, approximately 18 percent over the last four months,” Fiore detailed. “Managing headcounts and total supply chain inventories remain primary goals. 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.”