IHS Markit: Manufacturing PMI Falls to 11-Month Low in November

“Broad swathes of U.S. manufacturing remain hamstrung by supply chain bottlenecks and difficulties filling staff vacancies,” said Chris Williamson, IHS Markit’s chief business economist. “Although November brought some signs of supply chain problems easing slightly to the lowest recorded for six months, widespread shortages of inputs meant production growth was again severely constrained … with manufacturing acting as a drag on the economy during the fourth quarter.”

The seasonally adjusted IHS Markit PMI posted a reading of 58.3 in November, down marginally from 58.4 in October, and below the earlier released “flash” estimate of 59.1 (a reading above 50.0 indicates growth). The latest reading was the lowest since December 2020. It was dinged by a near-record lengthening of supplier lead times and increased inventory building. U.S. manufacturers reported a stronger rate of production increases on a sustained rise in new orders. But the pace of growth was the second slowest since September 2020 because the upturn was held back by material shortages.

New sales growth continued to significantly outpace production growth, although it slowed to an 11-month low. Material shortages and supplier delays led customers to place orders elsewhere, pushing new export orders up marginally.

Employment increased further in November, as firms sought to broaden capacity amid rising backlogs. The rate of job creation slowed to only a modest pace, however, as labor shortages stymied efforts to fill current vacancies.

“While demand remains firm, November brought signs of new orders growth cooling to the lowest so far this year, linked to shortages limiting scope to boost sales and signs of push-back from customers,” added Willimason. “While average selling price inflation eased as firms sought to win customers, the rate of input cost inflation hit a new high, hinting at a squeeze on margins.”