The U.S. manufacturing sector contracted for the ninth consecutive month in November due to pressure from import tariffs and weak order flow. According to data from the Institute for Supply Management (ISM), the manufacturing PMI index fell to 48.2 from 48.7 in October, indicating the sector remains in contraction.
Tariffs are increasing layoffs and costs
Some transportation equipment manufacturers surveyed said that President Donald Trump’s comprehensive tariffs are having a lasting impact, and that they have begun layoffs and shifting some production overseas.
The Trump administration imposed a 25% tariff on vehicle and spare parts imports in May, covering more than $460 billion annually, before subsequently offering discounts to some countries. On November 1, a new 25% tariff on medium and heavy-duty trucks and parts came into effect. Santander US Chief Economist Stephen Stanley commented, “The manufacturing sector continues to be pressured by the unpredictable tariff environment.” ISM data revealed that the new orders index fell to 47.4 in November, marking a contraction in nine of the last ten months. Growth was not seen except in computer electronics, machinery, and two other sectors. Production continued to contract in many areas, including wood products, transportation equipment, and textiles. Some chemical manufacturers said that “tariffs and economic uncertainty are suppressing demand for adhesives and sealants used in the construction sector,” while metal product manufacturers reported longer lead times. Electrical equipment manufacturers complained of “trade confusion.” Despite all the weak demand signals, manufacturers’ input costs increased in November. The ISM price index rose from 58.0 to 58.5, indicating that inflationary pressures may continue. Nationwide economist Oren Klachkin said, “This shows that upside risks to goods prices persist.” High Frequency Economics Chief Economist Carl Weinberg commented, “The manufacturing sector is sick,” noting that tariff policy has not delivered the expected recovery. The ISM’s employment index contracted for the tenth consecutive month, revealing that companies are focusing on “staff management” rather than hiring. The Federal Open Market Committee will announce its interest rate decision next week. While a significant number of committee members oppose further rate cuts, some executives support new cuts. The ongoing slowdown in US manufacturing makes the decision-making process even more critical. The Federal Open Market Committee will announce its interest rate decision next week. While a significant number of committee members oppose further rate cuts, some executives support new cuts. The ongoing slowdown in US manufacturing makes the decision-making process even more critical.
