U.S. Manufacturing Contracts for Ninth Straight Month — Evening Brief – 12.01.25
The U.S. manufacturing sector weakened further in November, with the ISM Manufacturing PMI falling to 48.2, down from 48.7 in October and below the 49.0 consensus, the Institute for Supply Management reported Monday. This marks the ninth consecutive month that the index has remained below the expansion threshold of 50, signaling persistent contraction across the industrial economy as 2025 concludes.
According to Susan Spence, Chair of the ISM Manufacturing Business Survey Committee, November’s decline reflected widespread softening across core components. “U.S. manufacturing activity contracted at a faster rate, with pullbacks in supplier deliveries, new orders and employment leading to the decrease in the Manufacturing PMI,” she said.
The new orders index—a key forward-looking indicator—fell to 47.4, down from 48.7, pointing to weakening demand conditions heading into the final month of the year. Several respondents cited customer hesitancy due to economic uncertainty, shifting inventory strategies, and tighter financial conditions.
The employment index dropped to 44.0 from 46.0, its weakest reading since July, indicating that manufacturers continue to scale back hiring and, in some cases, reduce headcount. Survey comments noted increased caution around labor costs and reduced overtime demand.
The supplier deliveries index saw one of the most notable declines, falling to 49.3 from 54.2—moving from “slowing” to “faster” delivery times. While faster deliveries can reflect improved supply chain efficiency, the sharp decline suggests that lower order volumes are the primary driver.
Despite broad weakness, the production index offered a rare bright spot, rising to 51.4 from 48.2. This expansion reflects improved output levels after several months of contraction, driven in part by reduced supply chain friction and efforts to clear backlogs.
The prices index increased modestly to 58.5 from 58.0, indicating that input costs remain elevated. Manufacturers continued to report higher energy, logistics, and raw materials costs, particularly related to metals and petrochemicals, even as demand cools.
Other notable dynamics from November’s report include a weak backlog of orders, continuing a six-month trend of contraction; relatively stable inventories, though many firms reported ongoing efforts to keep stock lean amid uncertain sales forecasts; and a further softening in exports, reflecting global manufacturing slowdowns, particularly in Europe and parts of Asia.
Overall, the November PMI underscores a manufacturing economy still struggling with subdued demand, cost pressures, and lingering caution among customers and producers. While improved production and faster deliveries signal some operational normalization, the broader picture points to a sector that remains firmly in contraction as it approaches 2026.