United States manufacturing remained stuck in contraction in November, with fresh data from the Institute for Supply Management (ISM) showing persistent weakness across factories as import tariffs continued to exert pressure on orders, costs and employment.
The ISM reported on Monday that its manufacturing PMI fell to 48.2, down from 48.7 in October and below expectations for 48.6. A reading below 50 signals contraction.
Manufacturers across multiple industries cited tariffs as a significant drag. Some transportation equipment producers reported layoffs tied directly to President Donald Trump’s tariffs, saying firms were “starting to institute more permanent changes due to the tariff environment”.
These included staff reductions, new guidance to shareholders and the development of offshore production facilities that would have otherwise been based in the U.S.
Earlier in the year, Trump imposed 25% tariffs on more than US$460 billion worth of imported vehicles and auto parts each year, though subsequent agreements have reduced some of those duties for selected countries.
Limited tariff relief has also been granted for parts and engines, but a new 25% levy on imported medium- and heavy-duty trucks and components took effect on 1 November.
While some respondents linked recent weakness to the conclusion of the government shutdown, economists noted that any rebound will be modest, with factory activity likely to remain subdued.
Although investment in artificial intelligence has supported certain segments, only four industries in the ISM survey - computer and electronic products, and machinery - reported growth.
Wood products, transportation equipment and textiles were among the sectors continuing to contract.
Chemical product manufacturers said “tariffs and economic uncertainty continue to weigh on demand for adhesives and sealants”, which are heavily used in construction.
Makers of miscellaneous goods reported softness due to “higher costs from tariffs, the government shutdown, and increased global uncertainty”. Some electrical equipment and appliance manufacturers complained of “trade confusion”, while others noted errors arising during export processes.
Wood product producers also noted that AI-generated information was often “confusing and… inaccurate”, leading to hesitant consumer behaviour and complicating demand forecasting.
Uncertainty around tariffs intensified last month after U.S. Supreme Court justices questioned their legality, fuelling speculation that they could be struck down - a scenario that may trigger further disruption as Trump considers alternative trade measures.
The president has defended the duties as necessary to support domestic industry, though economists argue that structural challenges, including acute worker shortages, make a full revival of the sector implausible.
The ISM’s forward-looking new orders index slipped to 47.4 from 49.4, having contracted in nine of the past ten months.
Tariff-driven price increases have curtailed demand, with unfilled orders continuing to shrink even as exports showed slight improvement.
Easing demand has reduced stress on supply chains, though some machinery manufacturers reported longer transit times for imports and fabricated metal producers cited extended lead times after reducing their supplier base to control costs.
Manufacturing employment contracted for the tenth month in a row. Susan Spence, chair of the ISM’s Manufacturing Business Survey Committee, said to Reuters, “67% of panelists indicated that managing head counts is still the norm at their companies, as opposed to hiring.”
Shannon Grein, quoted in the same Reuters story, warned that it was “not a terribly encouraging signal for blue-collar workers at what is a difficult time for employment prospects”.
