U.S. manufacturing activity continues to grow in November, albeit at slower pace - ISM

A report from the Institute for Supply Management (ISM) showed on Tuesday the U.S. manufacturing sector’s activity continued to expand in November, albeit at slower pace than in October.

The ISM's index of manufacturing activity came in at 57.5 percent last month, 1.8 percentage points from the October reading of 59.3 percent. The November reading pointed to the seventh straight month of expansion in factory activity.

Economists' had forecast the indicator to decrease to 58.0 percent.

A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

According to the report, the New Orders Index stood at 65.1 percent, down 2.8 percentage points from the October reading, while the Production Index registered 60.8 percent, a decrease of 2.2 percentage points compared to the October reading, the Employment Index was at 48.4 percent, 4.8 percentage points down from the October reading, returning to contraction territory. Meanwhile, the Supplier Deliveries Index stood at 61.7 percent, up 1.2 percentage points from the October figure and the Backlog of Orders Index registered 56.9 percent, 1.2 percentage points higher compared to the October reading.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted that the manufacturing economy continued its recovery in November. “Survey Committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are causing strains that will likely limit future manufacturing growth potential,” he added. “Panel sentiment, however, is optimistic (2.5 positive comments for every cautious comment), an improvement compared to October”. He also said that the past relationship between the PMI and the overall economy indicated that the PMI for November (57.5 percent) corresponds to a 4.3-percent increase in real gross domestic product (GDP) on an annualized basis.