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U.S. manufacturing activity roars back in November

Posted by IndustryNet on Monday, December 3, 2018

100000308grinding_hightechAfter two straight months of tepid growth, U.S. manufacturing activity charged back in November as new orders, production and employment posted strong growth, according the Institute for Supply Management’s latest survey of manufacturing executives.

U.S. manufacturing activity now stands at 59.3%, up 1.6% from October’s reading of 57.7%.

Executives surveyed by the ISM reported an uptick in orders, despite the impact of tariffs on supply chains and raw material costs, as well as a shortage of skilled labor.

Says Tim Fiore, Chairman of the ISM: “Comments from the panel reflect continued expanding business strength. Demand remains strong, with the New Orders Index rebounding to above 60%, the Customers’ Inventories Index declining and remaining too low, and the Backlog of Orders Index steady.”

November’s ISM report reflects a growing U.S. manufacturing sector, with this past month’s 59.3% reading far beyond the 50% mark that is indicative of expansion. November stands as the 33rd consecutive month of growth in the U.S. manufacturing sector, and the 115th straight month of growth in the economy overall.

Thirteen of eighteen industries surveyed by the ISM reported growth, led by computer and electronic products; plastics & rubber products; textile mills; electrical equipment, appliances & components; and miscellaneous manufacturing.

Three industries reported contraction in November: printing & related support activities; nonmetallic mineral products; and primary metals.

New orders surge

November’s ISM report showed remarkable growth in new orders for manufacturers, with that index jumping 4.7% over the month. The New Orders Index now stands at 62.1% -- marking the sector’s 35th consecutive month of growth in new orders.

Eleven of eighteen industries reported growth in new orders, led by furniture/ related products; computer & electronic products; miscellaneous manufacturing; and plastics & rubber products.

Production soars

Also notable on this month’s report is growth in production, as demand continues to rise. The ISM’s production Index edged up 0.7% over the month to a reading of 60.6% -- slightly ahead the overall manufacturing activity index.

Says Timothy Fiore: “ Production expansion continued in November, and at higher expansion rates compared to October. Transportation variables, labor constraints and tariffs appear to be less impactful, but lead-time expansions persist.”

Manufacturing employment upengine_worker

The ISM’s Employment Index remained firmly in expansion territory, registering 58.4% in November, up 1.6% from October’s reading. U.S. industrial employment has been in expansion mode for a solid 26 months, according to the ISM’s metrics, and has been so strong that many companies are facing a scarcity of skilled manufacturing workers.

The Department of Labor reported last month that the U.S. added 250,000 jobs in October, with U.S. manufacturing accounting for 13% of those job gains. Overall, the U.S. industrial sector has added nearly 300,000 jobs over the past year, according to the BLS.

The robust employment readings coincide with recent IndustryNet reports on growth in the precision machining sector, including precision screw machine products and precision milling and turning, as well as significant job gains recorded in Maryland and Connecticut

Prices surge

The ISM’s Prices Paid Index has been growing at a significant rate over the past 32 months, indicating manufacturers have been paying increasingly higher prices for raw materials. The month of November, however, marked a surprising turnaround for the trend with the Prices Paid Index dropping 10.9% from October’s reading of 71.6%.

ISM noted that raw material costs, especially for metal, have finally started to decline, though prices for methanol, freight and labor, as well as printed circuit boards and steel products continue to rise.

ISM noted shortages are persisting in electrical and machined components.

About the ISM

The Institute for Supply Management® (ISM®) is the first and largest not-for-profit professional supply management organization worldwide. Founded in 1915, ISM has over 50,000 members located in 100 countries.

About IndustryNet

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