Manufacturers showed renewed confidence in the industry’s trajectory in November, with companies hiring additional staff, according to S&P Global’s U.S. Manufacturing Purchasing Managers’ Index.
S&P Global’s PMI rose to 49.7 last month, supported by a slowing decline in new orders, with manufacturers pointing to improving demand conditions following Donald Trump’s presidential victory.
The Institute for Supply Management PMI was slightly lower at 48.4%, though still 1.9 percentage points higher than October. The ISM reading was also driven by improving demand, with new orders reaching 50.4%, the first time the index has hit growth mode since March.
A reading below 50.0% on a PMI index signals an economic contraction.
The S&P Global report found that the sector “closed to stabilization” last month, with input cost inflation falling to its slowest level in a year as companies plan for growth under the Trump administration.
“The gap between projected future production and actual current production is now the widest it has seen in a decade barring the pandemic, underscoring the marked divergence between challenging current conditions and growing expectations of better times ahead,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
Output also rose slightly last month to 46.8% due to moderating demand, and employment rose 3.7 percentage points to 48.1%, according to the ISM.
“Now that the elections are over and the policies are becoming clearer, participating companies have more clarity on how to make investment decisions,” Timothy Fiore, chair of the ISM’s Manufacturing Business Survey Committee, said at a conference Monday press.
On the supply side, lead times improved in November, with deliveries, inventories, prices and imports all pointing to future growth in demand, according to the ISM.
Manufacturers are “optimistic” about support from the incoming administration, Fiore said, although the threat of impending tariffs is causing some uncertainty in the industry. The economist added that manufacturers consider a possible increase in inflation, which experts say is a possible consequence of the tariff increase, as a future problem.
“Clearly the business community is holding on to the Republican victory and has viewed the potential for inflation as something we will deal with in the future. In the meantime, let’s resolve this thing and start the new cultivation,” Fiore said.
At the industry level, ISM speakers said they expect to return to growth mode in the coming months.
“Business remains slow. We expect the first half of 2025 to be similar and hope that demand will increase in the second half of 2025,” wrote one transportation industry respondent.
Even Trump’s recent promise of 25% tariffs on goods from Canada and Mexico, the United States’ two largest trading partners, is no cause for panic, Fiore said, especially given the previous preparations many companies have made for such moves.
“I don’t see [the United States-Mexico-Canada Agreement] by blowing up. I don’t see huge tariffs on our partners,” Fiore said. “Take a pill to relax and I think we’ll get through it. The companies on the panel are ready for this and we’ll see where it goes. Hopefully, if tariffs are put in place with our two large trading partners, these will be short-lived.”