US manufacturing grows for 18th consecutive month
Companies are working around the clock to keep up with holiday demand
U.S. manufacturing activity grew for the 18th consecutive month in November as companies continue to work around the clock to keep up with demand during the holiday season despite ongoing supply shortages and shipping delays.
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The Institute for Supply Management's manufacturing purchasing manager's index rose to a reading of 61.1 in November, up 0.3% from the prior month's reading of 60.8. Any reading above 50 indicates growth in the manufacturing sector.
Sub-categories of new orders, production and employment all grew at a faster pace in November, though many respondents commented that they are still struggling to hire, despite some modest progress over the past three months. ISM's report said that 86% of the employment comments related to hiring, with 51% of those respondents saying they are struggling to fill positions, an increase from October.
Businesses are also struggling to keep their inventories stocked due to elevated demand. ISM's customer inventories index registered a reading of 25.1 in November, the 62nd straight month that it's been what is considered too low. While it's not good for stores to have sparse or empty shelves, it will likely spur more production ahead to remedy that situation, the ISM report said. Prices are still elevated, but retreated somewhat in November to a reading of 82.4 from 85.7 in October.
Thirteen of the 15 manufacturing categories reported growth last month, led by apparel and furniture. The only two that contracted were printing and primary metals.
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The data comes a day after Federal Reserve chairman Jerome Powell warned lawmakers on Tuesday that the recent rise in COVID-19 cases and emergence of the omicron variant pose "downside risks to employment and economic activity and increased uncertainty for inflation" and that the U.S. central bank should consider accelerating its tapering of bond purchases during its next policy meeting.
In October, the Fed's preferred inflation measure surged by the most in nearly 31 years on an annual basis. Meanwhile, private sector job growth ramped up in November with 534,000 positions added, according to ADP, with the bulk in the leisure and hospitality and professional and business services sectors.
Investors will pay close attention to the Labor Department's November jobs report on Friday. Analysts surveyed by Refinitiv are expecting 550,000 new nonfarm jobs to be added to the economy, slightly above October's 531,000. The unemployment rate is anticipated to fall to 4.5%, which would mark the fifth straight month of declines and the lowest since March 2020.
The Associated Press contributed to this report