By Xavier Fontdegloria

Activity in the U.S. manufacturing sector continued to expand in November, albeit at a slower pace than that of the previous month as production and new orders cooled, data from a survey compiled by the Institute for Supply Management showed Tuesday.

The ISM Manufacturing Report on Business PMI for November stood at 57.5, slipping from 59.3 in October.

The reading is below expectations from economists polled by The Wall Street Journal, who predicted the PMI to be at 58.0.

The indicator signals that the manufacturing economy continued its recovery in November, ISM said, with four of five subindexes in moderate to strong growth territory but employment contracting.

"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 R. Fiore, chair of the ISM Manufacturing Business Survey Committee.

ISM compiles the PMI from a survey of manufacturing supply executives whose responses reflect the change, if any, in the current month compared with the previous one in certain areas of business activity. A PMI reading above 50 indicates that the manufacturing economy is generally expanding, while below 50 indicates that it is generally declining. November marks the sixth consecutive month of gains for the index.

The production index registered 60.8, a decrease of 2.2 points compared with October's 63.0, and the new orders index stood at 65.1, down 2.8 points from the October reading of 67.9.

The employment index swung back to contraction territory at 48.4, 4.8 points down from the October reading of 53.2.

"Labor market difficulties, both current and anticipated, at panelists' companies and their suppliers will continue to dampen the manufacturing economy until the coronavirus crisis ends," Mr. Fiore said.

The inventories index came in at 51.2, 0.7 point lower than the October reading of 51.9. The prices index was marginally down to 65.4.

Five of the big six industry sectors continued to expand compared with the previous month, the report said. And of the 18 manufacturing industries, 16 reported growth in November.

November's manufacturing PMI also signaled that the U.S. overall economic activity is rebuilding, as a reading above 42.8 over a period of time generally indicates an expansion of the overall economy. This is the seventh consecutive month in which the PMI indicated such expansion.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

December 01, 2020 10:31 ET (15:31 GMT)

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