U.S. ISM Manufacturing Index (November 2023)

Andrew Hencic, Senior Economist | 416-944-5307

Date Published: December 1, 2023

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ISM Shows U.S. Manufacturing Sector Contraction Continues

  • The November ISM Manufacturing Index remained unchanged at 46.7 in November, falling short the slight improvement to 47.8 markets had expected. Fourteen industries reported contraction in the month, while three reported growth. 
  • The new orders sub-index improved 2.8 percentage points (pp) to 48.3, while new export orders fell further into contraction territory – down 3.4 points to 46.0. The employment index signaled a contraction (45.8) for the fourth time in five months. 
  • Production contracted in November, slipping 1.9 pp to 48.5. With falling demand, the backlog of orders sub-index registered 39.3 – falling for the 14th month in a row. 
  • The prices paid sub-index jumped 4.8 points to 49.9 indicating the fall in raw materials prices stalled out.  

Key Implications

  • Another soft monthly reading for manufacturing, as demand continues to fall, while hiring remains in contractionary territory. This is now the 13th consecutive month the manufacturing sector has shrunk as the pandemic era boom fades. 
  • With consumer demand slowing, the continued challenges in the manufacturing sector have come to be expected. Looking forward, persistently high interest rates should continue to weigh on demand for goods, making for a challenging outlook for the sector. The silver lining for policymakers is that with limited growth in input prices, cost pressures for firms have abated, and should help keep a lid on consumer price inflation.