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Photo: Bill Pugliano/Getty Images

November ISM Manufacturing is out.The index reading came in at 49.5, well below estimates of 51.4 and last month’s reading of 51.7.

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The number indicates that American manufacturing has passed from expansion mode into a contraction phase, which seems to conflict with an earlier report from Markit that indicated a pickup in manufacturing activity.

The collapse in the index was led by Customers’ Inventories (down 6.5 per cent), Inventories (down 5.0 per cent), New Orders (down 3.9 per cent), and Employment (down 3.7 per cent).

The Production sub-component was perhaps the lone bright spot, rising 1.3 per cent to a reading of 53.7 from 52.4 last month.

The Prices Paid index also fell below expectation of 53.3 to 52.5, from 55.0 last month.

Below is a complete breakdown of the sub-components of the index:

Photo: ISM

Below are quotations from respondents to the ISM survey on business conditions:

  • “Conditions still appear to be positive for continued growth in sales.” (Machinery)
  • “Business is steady, but not much more than that. We are in a lull.” (Food, Beverage & Tobacco Products)
  • “The principle business conditions that will affect the company over the next three or four quarters will be the U.S. federal government tax and budgetary policies; the impact of those policies is not yet clear.” (Petroleum & Coal Products)
  • “Differences between first half of year and remaining half are very dramatic, growing to a peak in the middle of the year with a gradual decline since.” (Plastics & Rubber Products)
  • “Seeing a slowdown in request for quote activity.” (Computer & Electronic Products)
  • “The fiscal cliff is the big worry right now. We will not look toward any type of expansion until this is addressed; if the program that is put in place is more taxes and big spending cuts — which will push us toward recession — forget it.” (Fabricated Metal Products)
  • “Seeing a slowdown in demand across markets.” (Electrical Equipment, Appliances & Components)
  • “Economy is very sluggish. Production is down and orders have slowed considerably from Q1.” (Transportation Equipment)
  • “East Coast storms delayed some shipments.” (Primary Metals)
  • “Global economic uncertainty still seems to be sticking around which is not necessarily making things worse, but it is also not making things better from a demand standpoint.” (Chemical Products)

Here is a link to the full report >

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