The S&P Flash Manufacturing PMI remains below 50.0
- Before PM Mfg 50.0
- Manufacturing PMI flash 49.4 vs. 49.8 estimate
- Flash Services PMI estimates 50.8 vs. 50.4 vs. 50.6 last month
- Composite 50.7, unchanged from last month’s 50.7.
From Standard & Poor’s Global:
In November, US companies saw a marginal expansion in production, similar to the growth rate seen in October. Both manufacturers and service providers saw a slight increase in activity. Total new orders returned to growth after three months of contraction, but demand conditions for manufacturers remained unchanged.
As a result of lower demand and lower backlogs, companies reduced their workforce for the first time since June 2020, impacting service providers and goods producers alike. Cost pressures have eased, with input prices rising at the slowest rate in more than three years. However, higher service sector excise duties contributed to higher overall selling price inflation, although manufacturers saw a slower rise in factory gate duties in November.
Commenting on the data, Sian Jones, principal economist at S&P Global Market Intelligence, said:
“The US private sector remained in expansionary territory in November, as companies indicated another marginal rise in business activity. Moreover, demand conditions improved – largely driven by the services sector – with new orders returning to growth for the first time in four months. With However, the rise was historically weak, amid challenges in securing orders as customers remained concerned about global economic uncertainty, weak demand and rising interest rates.Business uncertainty also increased among US companies, as expectations regarding the outlook for next year fell to their weakest levels since July. .
Companies have cut employment for the first time in nearly three and a half years in response to concerns about the outlook. Job shedding extended beyond the manufacturing sector, with services companies reporting a renewed decline in headcount in November as they sought cost savings. “On a more positive note, input price inflation eased again, with cost burdens rising at the slowest rate in more than three years. The impact of higher oil prices appears to be dissipating in the manufacturing sector, where the rate of cost inflation has slowed significantly. Slight, but selling price inflation remained weak compared to the average over the past three years and was consistent with a rate of increase close to the Fed’s 2% target.
On recruitment:
- In November, US companies saw a decline in employment, the first in nearly 3.5 years.
- This decline affected the service sector and manufacturers.
- Reasons cited for the layoffs included weak demand, high cost pressures, and a hiring freeze due to margin concerns.
- Decreasing levels of unfinished business have also contributed to workforce reduction.
- Backlog declined for seven straight months in the fourth quarter of 2023.
- Both goods producers and service providers saw faster contractions in unfinished business, mainly due to lower operational capacity pressure.
About inflation:
- Margin pressures in the private sector eased.
- Companies raised selling prices more quickly.
- Cost inflation slowed for the second month in a row.
- Input prices continued to rise, but at the slowest pace since October 2020.
- Some companies have noticed lower energy and raw material costs.
- Manpower reduction also contributed to easing cost pressures.
- Manufacturers saw a noticeable slowdown in input price inflation.
- Service sector companies led a faster rise in overall selling prices in November.
- Manufacturers saw the slowest increase in factory gate fees since August.
- The goal was to increase new sales and maintain competitiveness.