U.S. Manufacturing Sector Expands in November

Dec. 3, 2014

According to the Manufacturing ISM Report on Business, economic activity in the manufacturing sector expanded in November for the 18th consecutive month, and the overall economy grew for the 66th consecutive month.

The report was issued by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee. "The November PMI registered 58.7%, a decrease of 0.3% from October’s reading of 59%, indicating continued expansion in manufacturing. The New Orders Index registered 66%, an increase of 0.2% from the reading of 65.8% in October. The Production Index registered 64.4%, 0.4% below the October reading of 64.8%. The Employment Index grew for the 17th consecutive month, registering 54.9%, a decrease of 0.6% below the October reading of 55.5%. Inventories of raw materials registered 51.5%, a decrease of 1% from the October reading of 52.5%. The Prices Index registered 44.5%, down 9% from the October reading of 53.5%, indicating lower raw materials prices in November relative to October."

Manufacturing expanded in November as the PMI registered 58.7%, a decrease of 0.3% when compared to October’s reading of 59%, indicating growth in manufacturing for the 18th consecutive month. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

A PMI in excess of 43.2%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI indicates growth for the 66th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 18th consecutive month. Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (55.8%) corresponds to a 4.2% increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for November (58.7%) is annualized, it corresponds to a 5.1% increase in real GDP annually."

ISM’s Production Index registered 64.4% in November, which is a decrease of 0.4% when compared to the 64.8% reported in October, indicating growth in production for the ninth consecutive month. An index above 51.1%, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The 14 industries reporting growth in production during the month of November — listed in order — are: Fabricated Metal Products; Textile Mills; Petroleum & Coal Products; Machinery; Food, Beverage & Tobacco Products; Furniture & Related Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Nonmetallic Mineral Products; Transportation Equipment; Primary Metals; Electrical Equipment, Appliances & Components; Computer & Electronic Products; and Paper Products. The only industry reporting a decrease in production during November is Chemical Products.