Manufacturing activity in November declined to its lowest level in 42 months, registering below 50 percent on the Purchasing Managers Index for the first time since April 2003, according to the latest Manufacturing Report on Index
issued Friday by the Institute for Supply Management.
A PMI in excess of 42 percent over a period of time generally indicates overall economic expansion. The November PMI was 49.5 percent, which ISM said indicates that the economy is continuing to grow but the manufacturing sector has entered a period of contraction.
Eight industries reported growth in November: apparel; leather and allied products; plastics and rubber products; primary metals; food, beverage and tobacco products; miscellaneous manufacturing; computer and electronic products; printing and related support activities; and chemical products.
ISM’s New Orders index was 48.7 percent in November, down from 52.1 percent the previous month. The Production Index registered 48.5 percent, compared to 51.9 percent in October. Manufacturers’ inventories edged up slightly. Customers’ inventories dropped some, but the index remains at a level that indicates manufacturers think their customers have too much inventory on hand. The Backlog of Orders index fell for the third straight month. One bright spot: new export orders, which have registered 48 consecutive months of growth.