US manufacturing fell for the first time since May 2020

In November, economic activity in the US manufacturing sector declined. The most recent reduction was in May 2020. The reason for the decline in output was a decrease in the number of new orders over the past three months.

On Thursday, the Institute of Supply Management (ISM) released data showing that manufacturing PMI fell to 49. In October, the value was at the level of 50.2. The decline in the index has continued for five consecutive months over the past six months. This is the first time the index has fallen below 50 since the coronavirus pandemic. A value equal to 50 is a threshold, as it separates the expansion and contraction of the sector.

According to Timothy Fiore, chair of the ISM's Manufacturing Business Survey Committee, the November value of the composite index indicates that enterprises are prepared for the upcoming cuts in output. 

As per the median forecast of the Bloomberg survey conducted among economists, the figure should have been 49.7. A total of six manufacturing industries registered November growth.

The price index of materials used in the manufacturing process has shown a continuous decline for eight months, based on the ISM’s report. 

The pace of reduction in inventories was the slowest since April 2020. This raises some concerns about the excess inventory being seen at certain retailers, and helps explain the decline in new orders.