Economic Report: U.S. manufacturing sector slumps further in November: ISM
The numbers: The Institute for Supply Management said its manufacturing index sank to 48.1% in November from 48.3% in October. Economists surveyed by MarketWatch had forecast the index would register a reading of 49.2%.
This is the fourth straight sub-50 reading. Readings below 50% indicate business conditions are getting worse.
What happened: The key new orders index dipped to 47.2 from 49.1 in October. Orders haven’t been below this level since April 2009. Inventories dropped to a 42-month low. Employment dipped to 46.3.
A similar manufacturing survey by IHS Markit, meanwhile, registered 52.6 in November.
What is the ISM saying? “Global trade remains the most significant cross-industry issue,” said Timothy Fiore, chair of the ISM’s manufacturing business survey committee.
Big picture: Weak export growth and caution among business leaders is hitting the manufacturing sector hard. There had been hope that manufacturing was stabilizing, but today’s data throw that theory into questions.
What are economists saying: “In short, this is a soft report, and the fall in orders, if sustained, suggests the headline index could dip a bit further in December. A charitable interpretation — and one consistent with the recent improvement in China’s PMIs — is that the ISM is bouncing along the bottom. We’d be surprised to see a further significant decline, but the sector is stuck in a mild recession with little prospect of a real near-term revival,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Market reaction: Stocks continued to move lower after the ISM report, with the Dow Jones Industrial Average