Manufacturing PMI Hits Contraction for First Time in 29 Months

The industrial manufacturing barometer fell another 1.2 points from October, continuing its year-long slide.
Concept of US industry development

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.

November 2022

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
New Orders 47.2 49.2 -2.0 Contracting Faster 3
Production 51.5 52.3 -0.8 Growing Slower 30
Employment 48.4 50.0 -1.6 Contracting From Unchanged 1
Supplier Deliveries 47.2 46.8 +0.4 Faster Slower 2
Inventories 50.9 52.5 -1.6 Growing Slower 16
Customers’ Inventories 48.7 41.6 +7.1 Too Low Slower 74
Prices 43.0 46.6 -3.6 Decreasing Faster 2
Backlog of Orders 40.0 45.3 -5.3 Contracting Faster 2
New Export Orders 48.4 46.5 +1.9 Contracting Slower 4
Imports 46.6 50.8 -4.2 Contracting From Growing 1
OVERALL ECONOMY Growing Slower 30
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.”

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