Operating conditions in the US manufacturing sector improved for a fourth successive month in November. A solid rise in production and a further increase in employment was reported as confidence in the outlook strengthened.

However, current sector performance was limited by a considerable slowdown in demand growth, in part due to weak sales, which in turn contributed to an unprecedented rise in stock of finished goods for a second month in a row.

Inflationary pressures meanwhile remained historically elevated. Tariffs were again frequently mentioned by panelists as having driven input costs higher, although the degree of pass through by manufacturers was weaker than in November with selling price inflation amongst the lowest of the year so far amid intense competition and weak demand.

The headline index from the report, the seasonally adjusted S&P Global US Manufacturing Purchasing Managers' Index (PMI), recorded 52.2 in November. That was down from 52.5 in the previous month and consistent with another solid, albeit slower, improvement in operating conditions.

Growth in November was underpinned by the best rise in output since August. In some instances, firms noted that sales volumes were weaker than expected, and with output rising solidly, the net impact was an unintended increase in inventories of finished goods.

Despite weaker than expected sales in November, confidence in the outlook jumped since October to reach its highest level since June.

Additional staff were also taken on to fill vacancies and in expectation of higher production and sales in the coming months.

Stock building earlier in the year meant that firms were hesitant in purchasing additional inputs during November, with input buying activity rising only marginally.

Tariffs also continued to drive higher input price inflation in November, which remained elevated and little changed since October.

Powered by Commodity Insights