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U.S. manufacturing slump deepens in November

WASHINGTON – U.S. manufacturing contracted for the ninth straight month in November, with factories facing slumping orders and higher prices for inputs as the drag from import tariffs persisted.

The Institute for Supply Management said Monday its manufacturing PMI dropped to 48.2 last month from 48.7 in October. A reading below 50 indicates contraction in manufacturing, which accounts for 10.1% of the economy.

Still, the PMI remained above 42.3, a level that the ISM said over time was consistent with an expansion of the overall economy. Economists polled by Reuters had forecast the PMI would rise to 49.0.

The Federal Reserve’s Beige Book report last week said overall consumer spending declined further by mid-November. It noted that while some of the U.S. central bank’s 12 districts reported manufacturing activity increased somewhat, “tariffs and tariff uncertainty remained a headwind.” President Donald Trump’s sweeping import duties have undercut manufacturing, though some segments have been boosted by a surge in artificial intelligence investment.

U.S. Supreme Court justices last month raised doubts over the legality of Trump’s tariffs, fueling speculation they would be struck down and cause more chaos as he is widely expected to shift to other trade tactics in the event of an adverse ruling.

Trump has defended the tariffs as necessary to protect domestic manufacturing, though economists have argued it is impossible to restore the industry to its former glory because of structural issues, including worker shortages.

The ISM survey’s forward-looking new orders sub-index decreased to 47.4 last month from 49.4 in October. This measure has contracted in nine of the last 10 months. Tariffs have raised prices for some goods, curbing demand. Unfilled orders continued to shrink, though exports improved slightly.

Weak demand meant less pressure on supply chains. The ISM survey’s supplier deliveries index fell to 49.3 from 54.2 in October. A reading below 50 indicates faster deliveries.

Despite subdued orders for factory goods, manufacturers paid more for inputs last month, a sign that inflation could remain elevated for a while. The survey’s prices paid measure increased to 58.5 from 58.0 in the prior month.

Factory employment declined, likely as manufacturers continued what the ISM previously described as “accelerating staff reductions due to uncertain near- to mid-term demand.” The survey’s measure of manufacturing employment contracted for the 10th consecutive month.

Tags Business News

Reuters

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