The 2020 Mid-Year Economic Update_long

Manufacturing Growth Flat in November

Manufacturing activity declined to its lowest level in 42 months in November after 41 consecutive months of growth, say the nation’s supply executives in the latest Manufacturing ISM Report On Business. The economy overall grew for the 61st consecutive month.

In November, the Purchasing Managers Index fell to 49.5%. The last time the PMI registered below 50% was April 2003 (46.5 percent). New Orders and Production both ended growth cycles at 42 months during November. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. On the positive side, growth in New Export Orders continued as the weaker dollar continues to fuel that segment.

The eight industries reporting growth in November ‘ listed in order ‘ are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Primary Metals; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Computer & Electronic Products; Printing & Related Support Activities; and Chemical Products.

Respondents to the report said:

    “Sales have leveled off, but we will have a record year. Second [year] in a row.” (Computer & Electronic Products)
    “Business has softened in the past 60 days. Down about 20 percent.” (Fabricated Metal Products)
    “Housing market slowed down.” (Furniture & Related Products)
    “We have hit another slow period in receiving new contracts. Quoting activity is fair.” (Machinery)
    “We are still trying to hire new maintenance techs, but find it difficult to find qualified people.” (Nonmetallic Mineral Products)

The manufacturing economy failed to grow in November as the PMI registered 49.5 percent, a decrease of 1.7 percentage points when compared to October’s reading of 51.2 percent. This is the lowest reading since April 2003 (46.5 percent) when the PMI was last below the 50 percent level.

A PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI indicates that the overall economy is continuing to grow while the manufacturing sector has now entered a period of contraction.

Economic indicators at MDM’s Databank.

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