#United States #Tempe #Manufacturing PMI #ISM Report #Supply Management

Overview of November 2024 Manufacturing ISM Report

In the latest Manufacturing ISM® Report on Business®, the nation’s supply executives revealed continued contraction in the manufacturing sector for the eighth consecutive month in November 2024, reflecting ongoing economic struggles. The Manufacturing PMI® registered 48.4%, a slight improvement from October's 46.5%. Despite the contraction, the overall economy continued to expand, marking its 55th month of growth after a brief contraction in April 2020.

Key Insights from the Report

The report highlights several critical aspects affecting the manufacturing landscape:

• - New Orders Index: Improved to 50.4% from 47.1% in October, indicating a return to growth after seven months of decline. This rebound shows weak but hopeful signs of demand recovery.
• - Production Index: Registered 46.8%, slightly up from 46.2%, indicating that production is still contracting but at a slower rate.
• - Employment Index: Increased to 48.1%, up from 44.4%, suggesting that employment losses in manufacturing are decelerating. However, the sector still faces challenges, with many companies opting for layoffs or hiring freezes.
• - Supplier Deliveries: This index recorded 48.7%, demonstrating faster deliveries as suppliers adjust to changing demand conditions.
• - Prices Index: Remained stable with a reading of 50.3%, suggesting raw material prices are on the rise but at a reduced pace compared to previous months.

Manufacturing Economy Trends and Challenges

According to Timothy R. Fiore, CPSM, C.P.M., Chair of the ISM® Manufacturing Business Survey Committee, the latest data is mixed. Although manufacturing activity remains in contraction, various indices are showing slight improvements which may suggest stabilizing conditions moving forward. The New Orders Index reflects cautious optimism as businesses report some level of increased orders, even amid ongoing uncertainties caused by inflation and market fluctuations.

Manufacturing respondents expressed mixed sentiments regarding future demand:

• - Chemical product manufacturers reported ongoing concerns due to high mortgage rates negatively impacting housing construction demand, a critical market for their products.
• - Transportation equipment manufacturers anticipate a slow first half of 2025, highlighting overall uncertainty in customer demand.
• - Despite a generally pessimistic outlook, there are indications of renewed interest from customers seeking to relocate manufacturing back to the U.S. as post-election clarity emerges.

Industry Performance

The report outlines that while the manufacturing sector as a whole is contracting, specific industries are witnessing growth. The three sectors that reported growth include:
1. Food, Beverage & Tobacco Products
2. Computer & Electronic Products
3. Electrical Equipment, Appliances & Components

Conversely, the following sectors reported declines:

• - Printing & Related Support Activities
• - Plastics & Rubber Products
• - Chemical Products
• - Paper Products
• - Transportation Equipment
• - Fabricated Metal Products
• - Furniture & Related Products
• - Machinery
• - Miscellaneous Manufacturing
• - Primary Metals

Fiore emphasized that while 66% of manufacturing GDP contracted in November, showing a gradual improvement in the manufacturing landscape, continued monitoring and management of supply and demand are crucial as the new year approaches.

Conclusion

The November 2024 ISM® Report presents a picture of ongoing challenges for the manufacturing industry, characterized by contraction yet marked by slight signs of recovery in specific areas. The need for adaptation to shifting market conditions remains essential as companies prepare for potential changes in consumer behavior and post-election impacts. As the industry looks ahead, the focus will be on navigating challenges while exploring opportunities for growth and improvement in demand dynamics.