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US Manufacturing PMI Rebounds to 48.4: Signs of Stabilization?

AInvestMonday, Dec 2, 2024 11:11 am ET
4min read


The Institute for Supply Management (ISM) reported that the US Manufacturing PMI (Purchasing Managers' Index) rose to 48.4 in November, indicating a slower pace of contraction compared to the previous month. Although the index remains below the crucial 50-point threshold, signaling an overall contraction, the improvement offers a glimmer of hope for the ailing manufacturing sector.

The New Orders Index returning to expansion territory, at 50.4, was a significant factor in the PMI increase. This suggests that demand is stabilizing and potentially recovering, as the index registered above the 50.0 threshold indicating growth. However, it's important to note that while this is a positive sign, the index remains relatively low, indicating that the manufacturing sector is still contracting overall.

The improvement in production, employment, and supplier deliveries also contributed to the PMI rise. The Production Index registered 46.8%, up 0.6 percentage points, while the Employment Index rose to 48.1%. Faster supplier deliveries, with the Supplier Deliveries Index falling to 48.7%, indicate a more accommodative supply chain, supporting production growth. Despite these improvements, the PMI's overall reading still signals an ongoing contraction in manufacturing activity, suggesting caution before declaring a robust recovery.

The moderate increase in the New Export Orders Index to 48.7% in November, up from 45.5% in October, contributed to the overall PMI rise. This improvement suggests a potential easing of global demand weakness, which could bode well for US manufacturing in the coming months. However, the index remains in contraction territory, indicating that export orders are still sluggish.

The Prices Paid Index Retreat to 50.3 from 54.8 in November indicates a slower rate of input price increases, which can positively impact the manufacturing sector's performance. The decline in the Prices Paid Index suggests that input costs are less of a burden on manufacturers, potentially leading to improved profitability and better overall performance in the sector.

The rise in the US Manufacturing PMI to 48.4 in November signals a slowdown in contraction, which could have implications for consumer spending and business investment. The PMI's movement suggests that manufacturing activity, while still contracting, is doing so at a slower pace. This could indicate a more stable economic environment, which could encourage businesses to invest more in expansion and consumers to spend more, as they feel more confident about the economy. However, it's important to note that the PMI is still below the 50 threshold, indicating that the manufacturing sector is still in contraction. Therefore, the implications for consumer spending and business investment may be limited, and further improvement in the PMI is needed to see more significant changes in these areas.

In conclusion, the rebound in the US Manufacturing PMI to 48.4 in November is a welcome sign of stabilization in the sector, but it is too early to declare a full-blown recovery. With the PMI still below the 50-point threshold, investors should remain cautious and monitor the situation closely. As the ISM Report On Business® indicated, 66% of manufacturing GDP contracted in November, up from 63% in October. While the New Orders Index returning to expansion territory is a positive sign, the overall PMI reading suggests that the manufacturing sector is still in a weak state. Investors should consider the various factors contributing to the PMI's movement and weigh the potential implications for the broader economy when making investment decisions.


Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.