U.S. Manufacturing Growing At Slower Pace

The Institute for Supply Management’s index for November was 50.8, down from October’s 50.9; readings above 50 signal expansion in the sector.

TEMPE, Ariz. — Economic activity in the manufacturing sector expanded in November, according to the Institute for Supply Management’s (ISM) Report On Business.
“Manufacturing continued to grow during November, a trend that is now in its 10th month. The rate of growth in the sector was down slightly compared to October,” said Norbert Ore, chair of the ISM Manufacturing Business Survey Committee. “While other segments of the economy are struggling, manufacturing continues to grow due to continuing strength in new orders, and a recovery in production last month. Prices, driven higher by energy prices, are once again the major concern.”
The top seven industries reporting growth include Apparel, Leather & allied Products; Food, Beverage & tobacco Products; Paper Products; Chemical Products; Machinery; Electrical Equipment, Appliances & components; and Computer & Electronic Products.
At 50.8, the PMI was down 0.1 percentage point from October. A reading above 50 percent signals expansion in the sector.
New orders rose 0.1 to 52.6 percent. Production rose 2.3 points to 51.9 percent.
Employment was down 4.2 points to 47.8 percent.
Supplier deliveries continued to slow, pushing the index up 1.1 points 51.7 percent.
Inventories slipped 0.3 to 47.2 percent, marking the 16th consecutive month of inventory liquidation.
At 67.5 percent, the Prices Index indicates manufacturers are paying higher prices on average compared to October.
Backlog of orders was down 4.5 points to 41.5 percent.
New export orders rose 1.5 points to 58.5 percent. Imports continued to contract, holding steady at the same 47.5 percent reported in October.
“The November ISM index for manufacturing shows that the industrial sector continues to struggle,” said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. “We predict manufacturing production activity will decline in the fourth quarter of this year and will fall further in the first half of 2008. The housing collapse and plummeting consumer confidence will drag down big ticket spending for motor vehicles and appliances. Furthermore, credit tightening, falling corporate profits, and declining capacity utilization will keep business investment in equipment lackluster at best. It is true that export order growth remains robust and import pressure has subsided. The trade sector will certainly cushion the industrial downturn.”
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