U.S. manufacturing continued its decline in November 2025, marking the ninth straight month of contraction according to the Institute for Supply Management’s (ISM) Manufacturing PMI at 48.2%. This reading, slightly lower than October’s 48.7%, signals ongoing challenges for factories dealing with lower orders and escalating input costs, factors heightened by tariffs and supply chain pressures.
The ISM Manufacturing PMI is a widely followed indicator that measures activity including new orders, production, employment, and supplier deliveries. While the overall manufacturing sector is contracting, the Production Index rebounded into growth territory last month at 51.4%, up from 48.2% in October. However, new orders continued to shrink, registering 47.4%, a sharper fall than October’s 49.4%. This gap between output growth and contracting orders illustrates a sector grappling with unstable demand and inventory adjustments.
A closer look at key components shows several pressures. The backlog of orders shrank more rapidly, with its index falling to 44%, indicating fewer outstanding orders waiting to be fulfilled. Employment within manufacturing declined further, dropping to 44%, reflecting companies’ ongoing reluctance to add staff amid uncertain prospects. Meanwhile, input prices remain elevated, with the Prices Index sitting at a high 58.5%, slightly above October’s 58. Rising costs impact suppliers and manufacturers alike, largely linked to the lingering tariffs imposed over the past few years.
Tariffs have played a significant role in this landscape by raising the cost of raw materials and intermediate goods. Manufacturers face higher bills for steel, aluminum, electronics components, and other essentials due to duties on imports from key trade partners. These increased expenses squeeze margins and compel businesses to pass on costs to buyers or absorb them, both difficult in an environment of weakening demand. While tariffs are not the sole factor, they contribute to the inflationary pressures seen across the board for U.S. manufacturers.
Inventory dynamics add to the story. Supplier deliveries have sped up recently, the index moving down to 49.3% from a slower 54.2%, suggesting some easing in supply chain delays. Meanwhile, inventories are contracting but at a slower rate, which could indicate cautious restocking as companies try to balance supply with unpredictable demand. Customers’ inventories remain too low for many companies, pointing to ongoing efforts to maintain lean stock levels and avoid excess.
Another dimension is the uneven performance across manufacturing industries. The ISM highlights that while three of the six largest industries, including Food, Beverage & Tobacco Products, Computer & Electronic Products, and Machinery, showed production gains, the broader sector’s health remains fragile. The proportion of manufacturing GDP experiencing some contraction remains high at 58%, though the share in strong contraction eased slightly to 39%.
Taken together, these factors paint a picture of a manufacturing sector navigating a difficult environment. Lower orders and continued employment cuts reflect a cautious outlook. Price pressures driven in part by tariffs and supply chain kinks complicate efforts for factories to regain full momentum. Although production can fluctuate, the persistent contraction over nine months signals structural challenges that U.S. industry must contend with as it waits for clearer signs of stronger demand or relief from cost headwinds.
