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U.S. Manufacturing Index Indicates Slightly Faster Growth In November

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Manufacturing activity in the U.S. grew at a slightly faster rate in the month of November, according to a report released by the Institute for Supply Management on Wednesday.

The ISM said its manufacturing PMI crept up to 61.1 in November from 60.8 in October, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 61.0.

The uptick by the headline index came as the production index advanced to 61.5 in November from 59.3 in October and the new orders index climbed to 61.5 from 59.8.

The employment index also rose to 53.3 in November from 52.0 in October, indicating a modest acceleration in the pace of job growth in the manufacturing sector.

"Manufacturing performed well for the 18th straight month, with demand and consumption registering month-over-month growth, in spite of continuing obstacles," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

However, Fiore noted, "Meeting demand remains a challenge, due to hiring difficulties and a clear cycle of labor turnover at all tiers."

The report showed the backlog of orders index fell to 61.9 in November from 63.6 in October but still indicated order backlogs expanded for the 17th straight month.

The supplier deliveries index also slid to 72.2 in November from 75.6 in October, pointing to a slowdown in the delivery performance of suppliers to manufacturing organizations.

On the inflation front, the prices index dropped to 82.4 in November from 85.7 in October, although the elevated reading continues to indicate supplier pricing power and scarcity of supply chain goods.

"The Omicron variant risks gumming up manufacturers' gears and intensifying already severe supply-chain problems," said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

He added, "Much is still unknown about the variant and whether existing vaccines can prevent severe illness, but if a worst case scenario materializes it would substantially dim our 2022 outlook."

On Friday, the ISM is scheduled to release a separate report on U.S. service sector activity in the month of November. The services PMI is expected to edge down to 65.0 in November from 66.7 in October.

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