Economic activity in the US manufacturing sector contracted in November 2022 for the first time since May 2020.
The November manufacturing Purchasing Managers’ Index registered 49 percent, 1.2 percentage points lower than the 50.2 percent recorded in October 2022. Six manufacturing industries reported growth in November, led by apparel, leather and allied products, while among the 12 industries reporting contraction were textile mills, furniture and related products.
The past relationship between the manufacturing PMI and the overall economy indicates that the manufacturing PMI for November corresponds to a 0.1 percent increase in real gross domestic product on an annualized basis. The US manufacturing sector dipped into contraction, with the manufacturing PMI at its lowest level since the coronavirus pandemic recovery began.Of the 18 manufacturing industries, only one reported growth in new orders in November–apparel, leather and allied products, while 14 industries reported a decline.The production index registered 51.5 percent in November, down 0.8 percent from October, but indicating growth for the 30th consecutive month.
The ISM prices index declined 3.6 percent in November to 43 percent, indicating raw materials prices decreased for the second time in 29 months. This was the index’s lowest level since a reading of 40.8 percent in May 2020.Over the past eight months, the index has decreased 44.1 percent, including a combined 26 percent plunge in July and August.
Price declines continue to be driven by relaxation in energy markets, copper, steel, aluminum, plastics and corrugate, as well as volatility in freight costs. The ten industries which paid decreased prices for raw materials in November were topped by textile mills and included furniture and related products. Seven industries, including apparel, leather and allied products, reported no change in prices for the month.
A number of companies reduced employment levels through hiring freezes, attrition and now layoffs. Turnover rates remained consistentand retirement issues generally the same rate since September 2022. Apparel, leather and allied products led the list of seven of the 18 manufacturing industries reporting employment growth in November. The five industries reporting a decrease in employment in November were topped by textile mills, while furniture and related products were among the six industries reporting no change in employment month to month.
The delivery performance of suppliers to manufacturing organizations was faster for a second straight month in November. The Supplier Deliveries Index registered 47.2 percent, 0.4 percent higher than October. Prior to October, the last reading under 50 percent was in February 2016.Six of 18 manufacturing industries reported slower supplier deliveries in November, topped by apparel, leather and allied products and textile mills. The 11 industries reporting faster supplier deliveries in November compared to October included furniture and related products. Companies continue their efforts to reduce their total supply chain inventories, indicated by the contraction in new orders, slow expansion in manufacturing inventories and the right level of customers’ inventories. Of 18 manufacturing industries, the eight reporting contracting inventories in November included textile mills, and apparel, leather and allied products.Six industries reported customers’ inventories as too high in November, led by textile mills.
Only two industries reported growth in order backlogs in November–apparel, leather and allied products, and machinery. Twelve industries reported lower backlogs in November, including textile mills and furniture and related products.Weakness in European economies and China’s economic sluggishness, as well as the strong dollar, continued to constrain new export order activity and negatively impact new order rates. Apparel, textiles and furniture were among the ten industries reporting no change in new export orders for the month.