Manufacturing economic activity contracts for first time in three years

Dec. 22, 2015

Ten out of 18 manufacturing industries reported contraction in November, with lower new orders, production and raw materials inventories accounting for the overall softness in November.

Manufacturing economic activity contracted for the first time in three years last month, according to the new Manufacturing ISM Report On Business. It also reported that the economy grew for the 78th consecutive month.

"Ten out of 18 manufacturing industries reported contraction in November, with lower new orders, production and raw materials inventories accounting for the overall softness in November,” said Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.

Five industries grew month-over month: printing and related support activities; nonmetallic mineral products; miscellaneous manufacturing; food, beverage and tobacco products; and transportation equipment. Medical device continues to be strong for miscellaneous manufacturing; the automotive sector is strong for fabricated metal products; and business has been good for transportation equipment.

Ten industries contracted in November. Chemical products are seeing a deflation in raw materials, and bookings and new orders are lower expected for computer and electronic products. Additionally, oil and gas is finding that "‘low’ oil prices are now the new reality with expectations to continue at this level for some time.”

Economic activity by index varied by index between October and November, as shown in the graph above and in the list below:

  • The Imports Index grew by 2 percentage points.
  • The Employment Index grew by 3.7 percentage points.
  • The Employment Index grew by 3.7 percentage points
  • The New Export Orders Index was unchanged from October
  • The Purchasing Managers Index (PMI) decreased by 1.5 percent
  • The New Orders Index decreased by 4 percentage points
  • The Production Index decreased 3.7 percentage points
  • The Prices Index decreased 3.5 percentage points, indicating lower raw materials prices for the 13th consecutive month.

The Manufacturing ISM Report On Business is based on data obtained from a survey of manufacturing supply managers based on information they collect within their respective organizations.

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