KPI – November 2023: State of Manufacturing

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Economic activity in the manufacturing sector contracted in October for the 12th consecutive month following a 28-month period of growth, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

The Manufacturing PMI registered 46.7% in October, 2.3 percentage points lower than the 49% recorded in September.

“Demand remains soft, but production execution is stable compared to September as panelists’ companies continue to manage outputs, material inputs and–more aggressively–labor costs. Suppliers continue to have capacity—75% of manufacturing gross domestic product (GDP) contracted in October, up from 71% in September. More importantly, the share of sector GDP registering a composite PMI calculation at or below 45%–a good barometer of overall manufacturing weakness–was 37% in October, compared to 6% in September and 15% in August. Three of the top seven industries by contribution to manufacturing GDP fell into this category,” says Timothy R. Fiore, CPSM, C.P.M., chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.


Courtesy of the Manufacturing ISM Report On Business:

  • Demand eased, with the (1) New Orders Index contracting at a faster rate; (2) New Export Orders Index continuing in contraction territory but with a modest increase; and (3) Backlog of Orders Index declining slightly and remaining in strong contraction territory.
  • The Customers’ Inventories Index reading reached “about right” territory, not accommodative for future production.
  • Output/Consumption (measured by the Production and Employment indexes) was negative, with a combined 6.5-percentage point downward impact on the Manufacturing PMI calculation. Panelists’ companies had stable month-over-month production and took more immediate actions to reduce head counts, using layoffs as the primary tool.
  • Inputs–defined as supplier deliveries, inventories, prices and imports–continued to accommodate future demand growth.
  • The Supplier Deliveries Index indicated faster deliveries for the 13th straight month, though at a slower rate compared to September, and the Inventories Index dropped further into contraction territory.
  • The Prices Index remained in “decreasing” territory, signifying continuing overall price reductions in spite of October’s energy market turbulence. Manufacturing supplier lead times continue to decrease, but at a slower pace.


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