Economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 115th consecutive month, the nation's supply executives said in the latest Manufacturing ISM Report On Business.
“Comments from the panel reflect continued expanding business strength,” said Timothy R. Fiore, chair of the ISM Business Survey. “Demand remains strong, with the New Orders Index rebounding to above 60%, the Customers’ Inventories Index declining and remaining too low, and the Backlog of Orders Index steady.
“Consumption strengthened, with production and employment continuing to expand, both at higher levels compared to October. Inputs—expressed as supplier deliveries, inventories and imports—gained as a result of inventory growth.”
The November PMI registered 59.3%, an increase of 1.6 percentage points from the October reading of 57.7%.
Other highlights from the report:
- The New Orders Index registered 62.1%, compared to the October reading of 57.4%.
- The Production Index registered 60.6%, compared to the October reading of 59.9%.
- The Employment Index registered 58.4%, compared to the October reading of 56.8%.
- The Supplier Deliveries Index registered 62.5%, compared to the October reading of 63.8%.
- The Inventories Index registered 52.9%, compared to the October reading of 50.7%.
- The Prices Index registered 60.7%, compared to the October reading of 71.6%, indicating higher raw materials prices for the 33rd consecutive month.
In addition, factory consumption improved, and inventories grew thanks to better supplier delivery, and import expansion was relatively stable.
“Lead-time extensions continue, while steel and aluminum prices are declining,” Fiore said. “Supplier labor issues and transportation difficulties are at more manageable levels, but they continue to limit production potential.”
The machinery and transportation equipment industries were among 13 reporting growth in November. Primary metals reported contraction.
“The manufacturing community continues to expand, with November adding positively to the three-month rolling PMI average,” Fiore said.
Here are some selected comments from respondents:
-- “Shortages, longer lead times and capacity constraints [particularly in the electronic components marketplace] and tariffs continue to strain the supply chain and disrupt normal business practices and activities." (Computer & Electronic Products)
-- “Seeing a number [of] areas of slowdown that are concerning: truck market loosening [and] ISO depots full of empty containers, all signs of decreasing business activity.” (Chemical Products)
-- “Production continues at increased levels.” (Transportation Equipment)
-- “Labor shortages in our area are affecting production volumes.” (Food, Beverage & Tobacco Products)
-- “Trade tariffs and commodity increases have greatly affected our ability to remain competitive in the market.” (Machinery)
-- “Business [orders] steady. Many customers [moving] orders up due to price increases [from commodity costs and tariffs].” (Furniture & Related Products)
-- “Business remains strong. Tariffs impact is fully reflected in Q3 results, and initiatives are underway to move work out of China into other low-cost countries.” (Miscellaneous Manufacturing)
-- “A lack of experienced workers is having an impact on production, which impacts sourcing due to the skills gap in the manufacturing trades; particularly computer numeric controlled machinists, but also assemblers and welders. The challenge is meeting customer-delivery requirements for new and repaired equipment.” (Fabricated Metal Products)
-- “Steel tariffs continue to put upward pressure on downstream materials (even when sourcing steel domestically). Long-haul trucking market seems to be normalizing after the implementation of the electronic logging requirements. Oil volatility is also beginning to make its way through downstream materials.” (Petroleum & Coal Products)
-- “Continuing to increase imports in order to receive material in by the end of the year to avoid potential 25-percent tariffs.” (Nonmetallic Mineral Products)