U.S. manufacturing continued to contract in November marking the ninth month in a row that factory activity has slipped. The latest nationwide survey of purchasing managers showed the manufacturing index falling to 48.2 in November, down from 48.7 in October. Any reading below 50 signals that the sector is shrinking rather than growing. The decline illustrates how challenges that began earlier in the year have steadily intensified rather than easing.
A sharp drop in new orders played a major role in November's decline. Factories reported that customers at home and overseas were pulling back on purchases due to higher prices, slowing economic conditions and uncertainty surrounding trade policies. The measure of new orders has been in contraction almost all year which means companies have less work lined up for the months ahead. Backlog orders also thinned which is often a sign that existing workloads are being completed faster than new business is coming in.
Employment in manufacturing weakened once again. Surveyed firms reported a continued reduction in factory jobs as hiring freezes and quiet layoffs became more common. Many companies said they were cutting staffing levels through attrition because demand was too soft to justify new recruitment. The drop in employment adds to concern that the manufacturing slowdown could spill into broader labor markets especially in regions that rely on factory work.
Input costs moved higher in November which added pressure to firms already dealing with slowing sales. Many manufacturers reported paying more for raw materials and imported components. Rising costs at a time of weak demand often leave companies squeezed between higher expenses and customers reluctant to accept price increases. Several firms noted that elevated tariffs on key industrial goods have made supplies costlier and less predictable contributing to the hesitation to invest in new equipment or expand capacity.
There were a few areas of modest improvement. Production levels rose slightly from the previous month suggesting some firms were still able to keep output steady even with weaker orders. Supplier delivery times improved as well which hints at smoother logistics compared with the disruptions seen earlier in the year. Inventories declined but at a slower rate which could mean manufacturers are adjusting production more carefully to avoid being stuck with unsold stock.
Even with these small signs of stabilization, the broader outlook remains difficult. Manufacturing makes up about a tenth of the U.S. economy and a downturn of this length often signals deeper structural strain. With businesses delaying investment and customers curbing spending the sector may continue to drag on economic performance going into 2026. Analysts say a meaningful recovery will require a rebound in demand clearer trade policy conditions and relief from elevated costs.
For now, factories are bracing for the possibility that the slump will continue as companies wait for more predictable economic conditions before placing new orders or hiring new workers.
