ISM Manufacturing Contracts for First Time Since 2012

The ISM Manufacturing Index fell to 48.6 points in November – down 1.5 points from October’s reading. November’s reading marked the first contraction since November 2012, as readings below 50 indicate contraction in the manufacturing industry. Of the 18 industries, 10 reported contraction in November, while only 5 reported expansion. Some survey respondents expressed concern over a downturn in Chinese and European markets, as well as the effect of the strong dollar suppressing foreign demand.

After falling in October, the Employment Index increased 3.7 points to 51.3, indicating a return to growth in employment. Nine of the 18 industries reported employment growth, while 5 industries, including apparel, leather and allied products, petroleum and coal, electrical equipment, machinery, and computer and electronic products, reported contractions.

The index for new orders fell 4.0 points to 48.9, indicating a contraction in new orders for the first time since 2012. Eight industries in total reported a decline in new orders for October.

Export orders continued to decline in November as the index registered 47.5 for the second consecutive month. November marked the sixth consecutive month of declines in new export orders. Five industries reported growth in exports, down from 6 in October. Eight industries reported a decrease including apparel, primary metals, chemical products, and transportation equipment.

The inventories index registered 43.0 points in November, 3.5 points lower than the October reading – marking contraction for the fifth consecutive month.

The price index fell 3.5 points to 35.5, indicating a decrease in raw materials prices for the thirteenth consecutive month.

Read the ISM release.