American manufacturers have recovered faster than other U.S. industries during the coronavirus pandemic.
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The numbers: American manufacturers expanded in November for the seventh month in a row, but they suffered a hiccup from a record coronavirus surge that made it harder to keep plants open and retain their workers.
The Institute for Supply Management said its manufacturing index fell to 57.5% in November from a 21-month high of 59.3% in the prior month. Economists surveyed by MarketWatch had forecast the index to total 58%.
Although readings over 50% indicate growth, companies encountered more struggles in November with worker absenteeism, temporary plant closures, and an inability to fill open jobs.
Read: The coronavirus is erasing jobs again
What happened: New orders and production both fell in November, but both were still at high and healthy levels.
The index for new orders slipped to 65.1% from a 16-year high of 67.9% in October.
The production gauge dipped to 60.8% from 63.0%.
Employment was the biggest negative. The employment index fell back into negative territory, dropping to 48.4% from 53.2%.
“Survey committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are causing strains that will likely limit future manufacturing growth potential,” said Timothy Fiore, chairman of the survey.
Read: Jobless claims likely inflated, GAO finds, and many unemployed were underpaid
Sixteen of the 18 industries tracked by ISM expanded in November.
The ISM index is compiled from a survey of executives who order raw materials and other supplies for their companies. The gauge tends to rise or fall in tandem with the health of the economy.
Big picture: Manufacturers have recovered faster than most other businesses and helped spur a U.S. economic rebound, but the surge in Covid-19 cases has increased the strain on them as well.
They are likely to encounter more turbulence in the next few months until the latest outbreak recedes, increasing the drag on the economy caused by new government restrictions on business.
What they are saying? “Even this sector isn’t immune to the slowing effect of the resurgence in case counts,” said senior economist Sal Guatieri of BMO Capital Markets.
Market reaction: The Dow Jones Industrial Average DJIA, +0.80% and S&P 500 SPX, +1.18% rose in Tuesday trades.
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