CHICAGO Declines in new orders, inventories and employment helped drive the November manufacturing purchasing managers index (PMI) down 2.2 percentage points compared with the previous month, according to the Institute for Supply Management (ISM).
"This months reading reflects the lowest level since July 2009," ISM manufacturing business survey committee chairman Bradley J. Holcomb said in a statement Monday.
The new orders index fell to 50.3 percent from 54.2 percent; the inventories index fell 5.0 points to 45.0 percent and the customers inventories index fell 6.5 points to 42.5 percent; and the employment index fell 3.7 points to 48.4 percent, the lowest reading since September 2009.
"The fiscal cliff is the big worry right now," said a survey respondent in the metal fabrication industry. "We will not look toward any type of expansion until this is addressed. If the program ... put in place is more taxes and big spending cutswhich will push us toward recessionforget it."
Metal producers and fabricators reported a decline in business in November compared with October. New orders and order backlogs shrank for both sectors. Fabricators had higher production rates, while metal producers saw output decline. Employment grew among metal producers but fell among fabricators.
Both sectors reported lowering their inventories and said that inventories among their customers had become too low.
Although the price index fell 2.5 points to 52.5 percent in November, aluminum and hot-rolled steel prices rose, survey respondents said. Metal producers and fabricators reported paying higher prices for raw materials.
Fabricators reported an increase in export orders last month while primary metal exports declined, but both sectors saw imports decline.
Comments by members of the Chicago chapter of the ISM were mixed. "The economy really seems to be hanging on a thread," one purchasing manager said. "I do not think that upward price movements can be sustained at a time when real growth is questionable."
Another said that a slowdown in sales is "becoming very alarming."
But one manufacturer said, "We are officially swamped and doing everything we can to get our machines out this year. Some will bleed into 2013."