The Economy

Monthly Manufacturing Activity Wanes for First Time Since 2012

Before November of this year, the last time manufacturing activity contracted was in November 2012.
Katie Kuehner-HebertDecember 1, 2015

While the overall U.S. economy grew for the 78th consecutive month, economic activity in the manufacturing sector contracted in November for the first time since 2012 (also in November), according to the latest Institute for Supply Management report released Tuesday.

The group’s Purchasing Managers’ Index for November registered 48.6, a decrease of 1.5 points from the October reading of 50.1. Economists polled by Reuters had, on average, expected a reading of 50.5. A reading below 50 indicates contraction of manufacturing activity.

“The ISM data is often viewed as a precursor to movement in the overall economy, though its contribution to U.S. economic activity has been in decline for decades,” Reuters wrote. “The ISM index fell below 50 in 2012 briefly, but the economy did not go into recession.”

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ISM’s employment index rose to 51.3 from 47.6 a month earlier, its highest reading since July. Expectations had been for a reading of 48.4.

The institute’s new orders gauge fell to 48.9, the lowest level since August 2012. The prices paid index fell to 35.5 from 39, compared to an expected 40.

Among ISM’s 18 manufacturing industries, five reported growth in November, in the following order: printing and related support activities; nonmetallic mineral products; miscellaneous manufacturing; food, beverage and tobacco products; and transportation equipment.

Ten industries report contraction in November, in the following order: apparel, leather, and allied products; plastics and rubber products; machinery; primary metals; petroleum and coal products; electrical equipment, appliances, and components; computer and electronic products; furniture and related products; fabricated metal products; and chemical products.

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