Factory activity continued to decline in November as orders weakened and tariffs raised costs, but confidence remains steady amid strong growth forecasts.
By yourNEWS Media Newsroom
U.S. manufacturing activity shrank for the ninth consecutive month in November, signaling continued pressure from slowing demand and tariff-related cost increases, according to new data from the Institute for Supply Management.
The ISM Manufacturing Purchasing Managers’ Index (PMI) fell to 48.2, down from 48.7 in October. Any reading below 50 indicates contraction. Despite the ongoing slowdown, the index remained above 42.3 — a level historically associated with overall economic growth.
Susan Spence, chair of ISM’s Business Survey Committee, said 58 percent of manufacturing GDP contracted in November. “The share of sector GDP with a PMI at or below 45 percent is a good metric to gauge overall manufacturing weakness,” she said in the report.
Manufacturing, which makes up roughly 10 percent of U.S. GDP, showed declines in new orders, employment, and supplier deliveries, with price pressures increasing due to tariff-related costs. Production, however, showed modest improvement, and inventories fell less sharply than in previous months.
Eleven of the 15 industries surveyed reported contraction, led by apparel and wood products. Growth was concentrated in computer and electronics manufacturing, food and beverages, tobacco products, and machinery.
Several respondents cited tariffs and trade uncertainty as leading factors in their slowdown. One transportation manufacturer told ISM, “We are starting to institute more permanent changes due to the tariff environment. This includes reduction of staff, new guidance to shareholders, and development of additional offshore manufacturing that would have otherwise been for U.S. export.”
Others pointed to the record government shutdown earlier this year as having disrupted business conditions.
Mixed Signals from Alternative Indexes
The S&P Global Manufacturing PMI painted a more optimistic picture, registering 52.2 in November — marking a fourth straight month of expansion. Chris Williamson, chief business economist at S&P Global Market Intelligence, said that while production growth helped lift the headline number, slowing new orders hinted at weakening demand.
“The health of the U.S. manufacturing sector gets more worrying the more you scratch under the surface,” Williamson said, noting that much of the growth came from clearing backlogs rather than sustained demand.
Broader Economic Context
The Atlanta Federal Reserve’s GDPNow model estimates third-quarter GDP growth at 3.9 percent, while the New York Fed’s Nowcast projects the economy could expand by more than 2 percent in the fourth quarter.
According to the Federal Reserve’s Beige Book, “Manufacturing activity increased somewhat, though tariffs and tariff uncertainty remained a headwind.”
Policy and Investment Trends
Before globalization, manufacturing made up a much larger share of U.S. economic output. President Donald Trump’s second-term trade policies have sought to reverse that trend by reshoring key industries and incentivizing domestic production through global tariffs and investment incentives.
Since Trump’s return to the White House, domestic and foreign corporations have committed trillions of dollars to new plants, workforce training, and technology infrastructure. Much of that investment centers on advanced manufacturing and artificial intelligence, while sectors such as pharmaceuticals, energy, and automotive production are also expanding their U.S. presence.
Williamson said manufacturers’ confidence is improving, helped by the end of the government shutdown and stronger fiscal and monetary support. “While near-term headwinds remain,” he said, “the medium-term outlook appears more stable as investment and policy clarity return.”
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