The ISM index fell to 49% in November, down 1.2 percentage points from the previous month (50.2%). Analysts had expected a drop to just 49.8%.
Overall US manufacturing activity contracted in November, the first since May 2020, at the height of the COVID-19 pandemic, according to the ISM professional federation index released on Thursday.
The index fell to 49%, down 1.2 percentage points from the previous month (50.2%), a bigger drop than expected by analysts who had expected an index at 49.8%, according to the consensus published by briefing.com.
An index below 50% indicates a decline in activity.
“American industry is contracting, at the lowest level since the beginning of the recovery after the pandemic”, underlined Timothy Fiore, president of ISM, quoted by the press release, who added that with “the drop in the rate of new orders in the last six months, the November index reflects how companies are preparing for a future decline in production”.
Already down in October (49.2%), the new orders index fell to 47.2% in November while the production index, still positive at 51.5%, fell by 0.8 percentage points compared to last month.
“The industry is clearly grappling with rising borrowing costs,” Pantheon chief US economist Kieran Clancy said in a statement, adding, however, that “on a positive note, the survey points to an improvement of supplies and therefore a downward pressure on underlying inflation”.
The supplier deliveries sub-index improved by 0.4 percentage points, although it is still declining at 47.2%. However, this is the lowest level observed since February 2012, if we exclude the month of October.
Inflation slowed in October in the United States, to 6% year on year against 6.3% the previous month, according to the PCE index, favored by the Federal Reserve to adjust its monetary policy.
The other measure, the CPI, also slowed to 7.7% year-on-year from 8.2% in September, falling to its lowest level since January 2022.
