Economic activity in the manufacturing sector remained fairly stable in November after an October high of 59%. The November Purchasing Managers Index published by the Institute for Supply Management, registered 58.7%, down a mere 0.3 percentage point from October. However, it indicates a continued expansion in manufacturing as the number remains above the benchmark of 50.
The New Orders index for November ticked up to 66% from October's 65.8%, which is a good sign. The Production index remained flat at 64.4, down a slight 0.4% from October's ISM index. Employment was also down slightly to 54.9% in November from 55.5% in October. Supplier deliveries bumped up from 56.2% in October to 56.8% in November, showing a slight slowing in that category that could be related to the West Coast longshoreman's slowdown.
Inventories dipped 1.0% to 51.5% in November from 52.5% in October's report. Customers' Inventories hit the 50.0% benchmark, up 2.0% from October's 48.0% showing that these are "about right" noted the ISM report. Prices took a fall from 53.5% in October to 44.5% in November, most likely a result of lowered energy costs for transportation of goods.
The Backlog of Orders index jumped from 53.0% in October to 55.0% in November, showing a growing backlog that could be a result of shipping problems from the West Coast due to the longshoreman's slowdown and threat of a full-blown strike. One respondent noted, "We have seen continued growth in transportation equipment. Slowdown and threats of a strike of West Coast longshoremen weigh heavily on U.S. operations."
Another respondent to the ISM survey said, "West Coast port longshoreman slowdown is affecting business with longer lead times."
Of the 18 manufacturing industries ISM tracks each month, 14 reported growth in November, compared with 16 reporting growth in October. Plastics & Rubber Products dropped from its first place spot in the October survey, to the ninth position. Fabricated metal products, which would include moldmaking dropped one slot from third in October to fourth on that list, showing a bit of a slowdown in the plastics industry, but that industry is being impacted by the slowdown of unloading container ships on the West Coast as well. One respondent in this category remarked that "deliveries through the West Coast are delayed."
The best news is that PET resin is one of the commodities down in price in November's survey. Good news for the packaging industry!