67 percent of panelists are managing head counts, not hiring. Price pressures rising.
Please consider the November 2025 Manufacturing ISM® Report On Business® .
Economic activity in the manufacturing sector contracted in November for the ninth consecutive month, following a two-month expansion preceded by 26 straight months of contraction, say the nation’s supply executives in the latest ISM® Manufacturing PMI® Report.
The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.
“Decreases in two of the four demand indicators (Backlog of Orders and New Orders) overwhelmed the gains posted by the New Export Orders and Customers’ Inventories indexes.
“Regarding output, production jumped into expansion, but employment contracted at a faster pace, as 67 percent of panelists (the same as October) indicated that managing head counts is still the norm at their companies, as opposed to hiring.
A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).
What Respondents Are Saying (Emphasis Mine)
- “New order entries are within the forecast. We have increased requests from customers to get their orders sooner. Transit time on imports seems to be longer.” (Machinery)
- “We are starting to institute more permanent changes due to the tariff environment. This includes reduction of staff, new guidance to shareholders, and development of additional offshore manufacturing that would have otherwise been for U.S. export.” (Transportation Equipment)
- “Tariffs and economic uncertainty continue to weigh on demand for adhesives and sealants, which are primarily used in building construction.” (Chemical Products)
- “No major changes at this time, but going into 2026, we expect to see big changes with cash flow and employee head count. The company has sold off a big part of the business that generated free cash while offering voluntary severance packages to anyone.” (Petroleum & Coal Products)
- “Business conditions remain soft as a result of higher costs from tariffs, the government shutdown, and increased global uncertainty.” (Miscellaneous Manufacturing)
- “The unstable market has made pricing fluctuate in a very volatile way; I have had to reduce suppliers for raw materials to maintain a better direct cost structure. Reducing my suppliers has reduced the availability of some items and created longer lead times.” (Fabricated Metal Products)
- “Business continues to be a struggle regarding long-term sourcing decisions based on tariffs and landing costs. External (or international) sourcing remains the lowest-cost solution compared to U.S. production/manufacturing. The delta is smaller now, reducing margins.” (Computer & Electronic Products)
- “The government shutdown has impacted our access to agricultural data, impacting agricultural markets and, as a result, decisions we make. Optimism for a tariff exemption on palm oil percolated but hasn’t come to fruition at this time.” (Food, Beverage & Tobacco Products)
- “Trade confusion. At any given point, trade with our international partners is clouded and difficult. Suppliers are finding more and more errors when attempting to export to the U.S. — before I even have the opportunity to import. Freight organizations are also having difficulties overseas, contending with changing regulations and uncertainty. Conditions are more trying than during the coronavirus pandemic in terms of supply chain uncertainty.” (Electrical Equipment, Appliances & Components)
- “Domestic and export business have been lackluster. Our customers are taking prompt orders only and still don’t have confidence to build inventory, much less make expansion plans. In fact, most of any kind of ‘planning’ has been undermined by unpredictability due to inconsistent messaging from Washington. Artificial intelligence is in its infancy stages, producing confusing and most often inaccurate information. This also causes apprehensive consumer buying patterns, contributing to the challenge of forecasting demand.” (Wood Products)
Important Respondent Comments
Please ponder comments 2, 4, 6, 9, and 10. Comment number 2 is particularly interesting. Did you catch it?
“We are starting to institute more permanent changes due to the tariff environment. This includes reduction of staff, new guidance to shareholders, and development of additional offshore manufacturing that would have otherwise been for U.S. export.” (Transportation Equipment)
Hoot of the Day: That company is developing more offshore manufacturing and firing US staff, not bringing more manufacturing back to the US.
It would be interesting to have a company name, but it’s best for them if it’s secret. If disclosed, Trump would be sure to go after them.
Another Hoot: Comment 4 – “The company has sold off a big part of the business that generated free cash while offering voluntary severance packages to anyone.” (Petroleum & Coal Products)
Q: Why is a Petroleum & Coal Products company struggling?
A: My guess is retaliatory tariffs by China, just as happened to US soybean exporters.
But that’s OK. I hear great things are coming in 2026.
Trump Adopts Chicago Cubs’ Perpetual Message, “Wait Till Next Year”
Please note Trump Adopts Chicago Cubs’ Perpetual Message, “Wait Till Next Year”
“One Big Beautiful Bill” did not resonate. Trump opts for “Wait Till 2026”
But “Wait Till 2026” is a fundamental mistake. When 2026 is bad, the message will have to change.
The beauty of a more Cub-esque “Wait Till Next Year” is the slogan never has to change.
Related Posts
March 13, 2025: The Amazing “Success” of Trump’s 2018 Aluminum Tariffs in One Picture
I hope you can take a bit of headline sarcasm because the true story follows.
September 6, 2025: Trump’s Aluminum Tariffs Seriously Backfire Already
Tariffs did not and will not bring production back to the US.
October 2, 2025: Trump Seeks a $10 to $14 Billion Farmer Bailout
Tariffs backfired on US agricultural exports.
Small businesses and end consumers are getting killed by Trump’s tariffs.
Reader Anecdote
The furniture tariffs decimated my wife’s employer, VCF, a 75 year furniture chain. Entered Chapter 11 bankruptcy last week.
3,500 about to lose their jobs in January. Ironically, this of course hits their furniture manufacturers in the Carolinas. Will be a net loss of manufacturing jobs in the end.
Chris Williamson on US manufacturing PMI:
https://www.pmi.spglobal.com/Public/Home/PressRelease/7c2acaf676064c92bab19610524887d3
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence “Although the headline PMI signalled a further expansion of factory activity in November, the health of the US manufacturing sector gets more worrying the more you scratch under the surface. The main impetus came from a strong rise in factory production, but growth in new order inflows slowed sharply, hinting at a marked weakening of demand growth. “In short, manufacturers are making more goods but often not finding buyers for these products. This combination of sustained robust production growth alongside weaker than expected sales led to a worryingly steep rise in unsold inventories. For two successive months now, warehouses have filled with unsold stock to a degree not previously seen since comparable data were available in 2007. This unplanned accumulation of stock is usually a precursor to reduced production in the coming months. “Profit margins are meanwhile coming under pressure from a combination of disappointing sales, stiff competition and rising input costs, the latter widely linked to tariffs. “Encouragingly, manufacturers have grown more optimistic about the year ahead, with the ending of the government shutdown helping lift confidence from the sharp drop suffered in October. Optimism is being fueled by hopes of improved policy support, including lower interest rates, as well as greater political stability, though it is clear that uncertainty remains elevated and a drag on business growth in many firms, holding confidence well below levels seen at the start of the year.”
Mish: Curiously, that is the same as ISM. Production Up,
Interesting indeed. It seems to be a laggy indicator then because it’s showing inventory build up since production is up/steady but most of it is going into stock rather than being sold.
Suggests things going to get really bad in the new year once stores realize the holiday sales aren’t as high as expected.
The AI mania is absolutely cannibalizing captal and physical resources from other sectors now and not by a little bit. Data centers account for 35% of construction spending now and that increase sidelined factory and warehouse construction. Actually the money flowing into AI has caused an increase of 1-2% in borrowing costs for companies outside the AI sector. I don’t remember ever seeing a distortion this big before. Of course this trend will reverse and free up capital, talent and materiel for the rest of the economy but when is something I can’t say. With robots taking over everything who knows.
This does affect electricity prices. The good part is that 75% of the data centers are being built in the South and the Midwest where electricity prices are lower and where they have abundant natural gas supplies meaning that the electricity production can be expanded quickly and with fewer regulatory hurdles. That doesn’t mean prices will come down but the increased demand can be addressed as opposed to a place like California where you would have to be crazy to build there. The South and the Midwest have electricity prices lower than China’s and that is not going to change.
As for the tariffs, the consensus is that the tariffs have added only 0.3-0.5 percentage points to core PCE inflation which is far far lower than what some people here projected. Margin compression is at work as some other people here expected.
We simply can not survive without Chinese goodwill.
Say’s law has been denigrated.
Wolf noted the same on his site but at the same time said the S&P US Manufacturing PMI grew for the 10th time in 11 months in 2025.
Mish, is there a reason you use the ISM PMI instead of the S&P PMI and it would be interesting to know why the 2 PMIs are differing in their opinions on manufacturing.
I tend to look at ISM because that is what GDPNow looks at.
It does not consider S&P at all.
If you watch the market reaction, it does not respond to the PMI either.
But yeah, that’s a fair question. Clearly there is a sampling issue of some sort. They are both diffusion indexes with big problems.
Finally, ISM manufacturing employment does seem to track BLS job reports on manufacturing.
I will look at PMI now to see what they have to say.
TT – See pinned comment
Mish
Mass Layoff Warnings Climb to Highest Level in Nearly a Decade
https://www.newsweek.com/mass-layoff-warnings-climb-to-highest-level-in-nearly-a-decade-11125673
Mish, can you please double check because I have it on good authority from MAGA clowns that tariffs don’t cause inflation and are guaranteed to bring endless prosperity, so much so that the income tax will be abolished…/s
Did anyone catch that Trump said he’s not publishing GDP report for Q3.
https://www.msn.com/en-us/money/markets/trump-canceling-gdp-report-comes-under-scrutiny/ar-AA1R6nb5
Must be really bad….turns out all of the GDP is fake circular investments from the AI gang.
That’s just the advance report.
I see no issue cancelling it. We are missing key data that was not collected.
The taco economy is doing what many expected. After all, it isn’t rocket science. Just wait until he become fully in charge of the fed.
Time to load up on Trump coin!
I plan on putting all my excess cash to work. And where better than with Taco? Oh wait, what excess cash lol