The following are diffusion indices, based on business surveys, which means that >50 indicates expansion and <50 indicates contraction, and 50 indicates no change. A larger or small number indicates breadth, not intensity, among survey respondents.

The ISM Manufacturing Index fell -1.2 points in November, into contraction at 49.0. This was the first contraction reading since May 2020, following 29 consecutive months of growth.

Manufacturing production remains in modest expansion territory, but new orders are in contraction (47.2). So is employment, supplier deliveries, inventories, backlogs, and trade. The good news? Prices are definitely falling back (43.0).

Prices for metals, plastic, ocean freight, and lumber are all declining. There are still shortages and price pressure in electronics.

Companies across multiple sectors responding to the ISM Manufacturing survey for November report a slowdown in business:

The S&P U.S. Manufacturing PMI also showed a decline into contraction. It fell -2.7 points in November to 47.7, its first contraction reading since June 2020.

S&P’s economists made the following observations:

The ISM Services Index covers a broader range of the U.S. economy. In contrast, it rose +2.1 points to a solidly expansionary 56.5.

Business activity surged +9.0 points to a vigorous 64.7, while new orders weakened slightly but remained positive at 56.0. Employment returned to expansion territory. Price pressure in services remains elevated. New exports orders, however, plunged into deep contraction at 38.4.

Unlike manufacturers, which report a noticeable slowdown, US service companies say business is still strong. But they continue to experience tight supply chains.

The S&P U.S. Services PMI, however, shows the service sector in contraction. It fell -1.6 points in November to 46.2.

S&P economists offered the following comments:

The two sets of surveys agree that U.S. manufacturing is currently in contraction, but offer contradictory indications for the direction of the broader services sector.

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