The Numbers

The barometer of business conditions at American factories continued to show negative signs in November, marking the 13th consecutive month without improvement in the industrial sector of the economy. The Institute for Supply Management's manufacturing survey remained unchanged at 46.7%, a concerning figure as numbers below 50% indicate contraction. This negative trend has persisted for over a year, with the last similar occurrence happening during the Great Recession from 2007 to 2009. Economists surveyed by the Wall Street Journal had anticipated a slightly higher reading of 47.7%.

Key Details

Several key details are worth noting:

• The index of new orders experienced a modest increase of 2.8 points, reaching 48.3%.
• The production barometer, however, dropped by 1.9 points to 48.5%.
• The employment gauge slipped by 1 point, registering at 45.8%.
• The prices index, which serves as a measure of inflation, rose by 4.8 points, reaching 49.9%.

The Big Picture

Although there have been some indications that the industrial side of the economy may be approaching its lowest point, prevailing conditions are expected to remain weak as long as interest rates remain high. Consumer purchases of big-ticket items, like cars, tend to be discouraged by elevated interest rates, further restraining business investment. It is worth noting that heavy industry represents approximately 10% of the gross domestic product.

Looking Ahead

Despite the possibility of a slight improvement, survey Chairman Timothy Fiore stated that demand remains soft, suggesting that significant changes are unlikely in the near future.

Market Reaction

In Friday's trades, both the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) experienced slight gains.