November 2019 Institute for Supply Management

America’s economy was split in November 2019 according to the Institute for Supply Management (ISM).  The nation’s manufacturing base continued to contract, falling for a fourth consecutive period.  However, non-manufacturing pushed its string of expansions further, reaching 118 months of growth in a row.

Manufacturing data were mostly negative, but we found a thin silver lining.  The headline tally fell to 48.1 from 48.3 in October; in a diffusion index like ISM, any readings below 50 suggest contraction.  This development means the economic setback accelerated in the period.  The forward-looking category of new orders worsened even more, falling 1.9 points to 47.2.  While the future looks less bright than a month earlier, the coincident portion of the indicator, production, managed to edge up to 49.1 from 46.2, so the contraction slowed. 

Non-manufacturing (aka services) moved forward but did so at a slower pace. The headline tally fell to 53.9 from 54.7.  Business activity declined to 51.6 from 57.0 which does not bode well for gross domestic product’s pace in the final quarter of this year.  But things look a little brighter further down the pike as new orders increased 1.5 to 57.1.

Services represent a larger portion of America’s output, so the economy is still moving ahead.  However, the pace of growth continued slowing in November, meaning exogenous shocks remain a threat to the economy because the expansion is relatively tepid.  While there aren’t any clear signals that a recession is looming, we don’t yet have evidence of renewed acceleration either.