November 2019 ISM Manufacturing Index, October Construction Spending

Robert A. Dye, Ph.D.

,

Daniel Sanabria

Construction

The ISM Manufacturing Index fell slightly from a contractionary 48.3 in October, to 48.1 in November.



U.S. Manufacturing Sector Contracts for Fourth Month

*     The ISM Manufacturing Index for November fell to 48.1, its fourth consecutive month below 50.
*     Construction Spending for October fell by 0.8 percent.
*     The Caixin China Manufacturing PMI for November showed a modest improvement.
*     The Eurozone Manufacturing PMI for November showed ongoing contraction.

The ISM Manufacturing Index fell slightly from a contractionary 48.3 in October, to 48.1 in November. A reading below 50 indicates a contracting manufacturing sector for the U.S. economy. The index first fell below 50 in August and has remained below 50 for four consecutive months. In November, nine out of ten sub-indexes were below 50. The exception was supplier deliveries, which increased from 49.5 in October, to 52.0 in November. Only 5 out of 18 industries reported growth in November. They were apparel, food, paper, miscellaneous manufacturing and computers. Anecdotal comments were mixed. Some were cautiously positive, while others were gloomy. Trade tariffs remain a key concern. The Trump Administration has just announced plans to reimpose tariffs on imports of steel and aluminum from Brazil and Argentina. According to the Institute of Supply Management, a manufacturing PMI for the U.S. above 42.9 is consistent with an overall expanding U.S. economy. But that depends on how fast the service sector is growing.

U.S. construction spending for October dipped by 0.8 percent for the month. It was up by 1.1 percent over the previous 12-month period. In October, spending on private residential construction dipped by 0.9 percent as new multifamily projects eased. Over the year, spending in private residential construction projects inched up by 0.5 percent. Private nonresidential spending fell by 1.2 percent in October and it was down by 4.3 percent over the year. Spending on public projects slipped by 0.2 percent in October. Over the year ending in October, it was up by 10.2 percent.

The Caixin China Manufacturing PMI showed an uptick in China manufacturing activity in November. This was the fourth consecutive monthly improvement. Despite improved new orders and production, the 12-month outlook slipped to a five-month low. The Eurozone Manufacturing PMI for November signaled ongoing contraction in the manufacturing sector there.

Market Reaction: U.S. equity markets opened with losses. The yield on 10-Year Treasury bonds is up to 1.83 percent. NYMEX crude oil is up to $55.92/barrel. Natural gas futures are up to $2.30/mmbtu.



Alert_12022019

For a PDF version of this publication, click here: November 2019 ISM Manufacturing Index, October Construction Spending

The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations. The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team. We are not offering or soliciting any transaction based on this information. We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation. Although the information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed. Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information.

December 2, 2019
Robert A. Dye, Ph.D., Senior Vice President and Chief Economist at Comerica Bank

Robert A. Dye, Ph.D.

Senior Vice President and Chief Economist
Daniel Sanabria, Senior Economist at Comerica Bank

Daniel Sanabria

Senior Economist

Related Content