U.S. manufacturers express cautious optimism in November, buoyed by slowing new order declines and clearer policy outlooks under the Trump administration.
PMI Trends Signal Stabilization Amid Uncertainty
Manufacturing activity in the U.S. edged closer to stabilization in November, according to key purchasing manager indices (PMIs) from S&P Global and the Institute for Supply Management (ISM).
S&P Global’s U.S. Manufacturing PMI rose to 49.7, a marginal improvement that reflects slowing declines in new orders and a sense of renewed demand. Meanwhile, ISM’s PMI registered at 48.4%, a 1.9 percentage-point increase from October, with new orders climbing to 50.4%, indicating growth for the first time since March.
Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that the gap between current output and future expectations remains historically wide, highlighting manufacturers’ confidence in better times ahead despite current challenges.
Despite these positive signals, a PMI below 50 still indicates contraction, underscoring the fragile nature of the sector’s recovery. Manufacturers remain optimistic about growth prospects, supported by improved clarity in policy direction following Donald Trump’s reelection. However, concerns linger about potential tariff hikes, which could stoke inflation and disrupt supply chains.
Pockets of Growth and Persistent Challenges
Growth was concentrated in three manufacturing sectors in November: food, beverage, and tobacco; computer and electronic products; and electrical equipment, appliances, and components. In contrast, 11 industries, including plastics, chemicals, and transportation equipment, experienced contractions.
Employment and production metrics showed modest gains, though they remained below expansion levels. ISM data revealed employment rose to 48.1%, while production increased slightly to 46.8%. These shifts suggest manufacturers are preparing for eventual growth but are still grappling with subdued demand.
Supply chain conditions offered a glimmer of hope, with shorter lead times and improvements in inventories and imports, hinting at future demand stabilization. Still, manufacturers are navigating uncertainty surrounding trade policies, particularly Trump’s pledge to implement 25% tariffs on imports from Canada and Mexico.
Fiore, chair of ISM’s manufacturing survey committee, emphasized that manufacturers are treating potential inflation from tariffs as a “future problem” while focusing on growth opportunities today.
Optimism Tempered by Caution
While November’s data suggests a turning point, supply chain leaders must remain vigilant. Growth will depend on their ability to navigate policy changes and adapt to evolving demand. Leaders should seize this moment to strengthen relationships with suppliers, diversify sourcing strategies, and invest in technology to bolster resilience. The path ahead holds promise, but only for those who prepare strategically.
