US manufacturing contracts at slow pace; input price growth cools
The improvement reported by the Institute for Supply Management (ISM) on Monday tracked similar increases in other sentiment surveys, which have risen on hopes of more business-friendly policies from the incoming Trump administration.
Still, manufacturing is not out of the woods yet. ISM Manufacturing Business Survey Committee Chair Timothy Fiore noted that «production execution eased in November,» consistent with demand sluggishness and weak backlogs, and that suppliers continue to have capacity, with lead times improving but some product shortages reappearing.
«It is worth noting that in the aftermath of the 2016 election, the ISM index rose for four straight months, as business optimism swelled,» said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets. «I would not be surprised to see a similar dynamic this time, though in the current case, the underlying fundamentals for the factory sector have been tepid at best for a while.»
The ISM said its manufacturing PMI increased to a five-month high of 48.4 from 46.5 in October, which was the lowest level since July 2023. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.3% of the economy.
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