Economy
IHS Markit: Manufacturing PMI Falls to 11-Month Low in November
Written by David Schollaert
December 2, 2021
U.S. manufacturing activity fell to its lowest point of the year in November. Producers reported near-record supply delays, the slowest new order inflows year-to-date, and waning job growth, according to the latest U.S. Manufacturing PMI data from IHS Markit.
The report noted that extended lead times, supplier shortages and higher energy prices pushed the rate of cost inflation to a fresh high. Firms continue to try to pass on higher costs to clients. But the pace of price increases has slowed to its lowest level in three months amid signs of pushback from customers.
“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.”
David Schollaert
Read more from David SchollaertLatest in Economy
New York state manufacturing falls back into contraction
After a brief pickup in September, manufacturing activity in New York state retreated into contraction, according to the October Empire State Manufacturing Survey.
Dodge Momentum drops on moderating data center growth
Slowing growth in data center planning caused the Dodge Momentum Index (DMI) to pull back in September. The decline followed five months of growth after the index hit a two-year low in March.
US construction spending drops again in August
Construction spending in the US declined for a third month in August but showed an increase year over year (y/y). The US Census Bureau estimated construction spending to be $2.131 trillion in August on a seasonally adjusted annual rate (SAAR). While this was 0.1% below July’s revised spending rate, it was 4.1% higher than spending […]
ISM: Manufacturing contracts again in September
US manufacturing activity contracted for the sixth consecutive month in September, according to the latest report from the Institute for Supply Management (ISM). The index has indicated a contracting industrial sector for 22 of the past 23 months.
Chicago Business Barometer remains gloomy in September
The Chicago Business Barometer increased marginally in September but continues to indicate deteriorating business conditions.