Production Pops While PMI Drops: November Stalls at 48.2 as Orders Sink to 47.4

The official press release dated 2025-12-11 tells a mixed story. The headline Manufacturing PMI sits at 48.2 (contraction), while production “jumped into expansion” at 51.4. But the dateline inside the release itself reads Dec 01, 2025 (10:00 ET)—an internal timing inconsistency that sets the tone for a report leaning hard on bright spots while forward indicators dim. Beneath the narrative, output is being propped up by backlog liquidation, not demand.

Here’s what the data reveals:

• New Orders fell to 47.4 (down 2.0 points m/m), the third straight month of contraction.

• Backlog of Orders dropped to 44.0 (down 3.9), now contracting for 38 months—fueling production, not future sales.

• Employment slid to 44.0 (down 2.0), the 10th consecutive month of faster contraction.

• Supplier Deliveries fell to 49.3 from 54.2—faster deliveries consistent with cooling demand, not “mixed” inputs.

• Prices rose to 58.5, up for 14 straight months, signaling persistent cost pressure despite soft demand.

• Breadth is weak: only 4 industries expanded while 11 contracted, even as the release spotlights three of the six largest industries growing.

• Trade remains soft: New Export Orders 46.2 and Imports 48.9 improved m/m but are still in contraction.

The numbers behind the narrative

Only January (50.9) and February (50.3) of the past 12 months were above 50; November’s 48.2 extends the broader manufacturing slump.

The Date That Didn’t Match—and a Narrative That Doesn’t Either

The release is marked 2025-12-11 but dated inside as Dec 01, 2025 (10:00 ET). Timing hiccups happen, but it mirrors a deeper narrative drift: the report leans on a headline claim that the overall economy has grown for 67 straight months and maps 48.2 to 1.7% GDP—while also noting that 58% of manufacturing GDP is contracting and 39% is at or below 45. That’s not a soft patch; that’s breadth and depth consistent with a manufacturing recession.

The messaging pattern is familiar: highlight a rebound in production and pockets of large-industry strength while the leading indicators—orders, backlogs, employment—roll over. November fits the script.

Output Without Orders: Backlogs Do the Heavy Lifting

“Production jumped into expansion” at 51.4 looks good until you check the fuel: not new demand, but backlog drawdowns. Backlog fell to 44.0 (down 3.9 m/m), now contracting for 38 straight months. Meanwhile, New Orders contracted to 47.4 for the third month in a row, and are below the 12‑month average (48.9). That’s an unsustainable configuration: production > orders + falling backlog = future output risk.

The report continues to tout “Customers’ Inventories too low” as a forward positive—now a 14‑month refrain—but orders aren’t following. If “too low” hasn’t converted into bookings after more than a year, it’s not a pent-up driver; it’s a sign customers are running tight intentionally in a high-cost, policy‑uncertain environment.

Labor, Deliveries, and the Demand Chill

If demand were firming, you’d expect hiring to stabilize and deliveries to slow. Instead:

• Employment fell to 44.0, signaling the 10th month of faster contraction—hardly consistent with a near‑2% GDP mapping.

• Supplier Deliveries dropped to 49.3 from 54.2, indicating faster deliveries—typically a demand-cooling signal, not improved “mix.”

• Imports at 48.9 and New Export Orders at 46.2—both still contracting—underscore soft domestic and global demand.

Respondent commentary lines up with the data, not the headline:
- Workforce actions and offshoring tied to tariffs (Transportation Equipment).
- Voluntary severance and cash flow stress (Petroleum & Coal Products).
- Demand softness linked to tariffs and a government shutdown (Chemical Products; Miscellaneous Manufacturing).
- Exporting difficulties, shifting regulations, and freight issues “more trying than during the coronavirus pandemic” (Electrical Equipment, Appliances & Components).
- Customers ordering only for immediate needs—no inventory building or expansion plans (Wood Products).
- Supplier consolidation to manage costs leading to selective longer lead times (Fabricated Metal Products)—a cost-control response, not a demand boom.

Prices Rising Into Weakness: Margin Math Gets Ugly

Prices rose to 58.5 and have increased for 14 consecutive months. Pair that with falling orders and faster deliveries and you have the classic late‑cycle squeeze: input inflation with deteriorating demand. Even as inventories are still sub‑50 at 48.9, the rebound from 45.8 means the risk of unwanted stock grows when Production (51.4) outruns New Orders (47.4). Unless output throttles back quickly, manufacturers face a choice: protect price and sacrifice volume, or chase volume and bleed margins.

Breadth and Trade: The Recessionary Mix

Breadth is the tell. Only four industries are expanding while 11 are contracting, yet the release highlights that three of the six largest industries grew—as if size cancels breadth. It doesn’t. When nearly two-thirds of sector GDP is shrinking and almost 40% sits at ≤45, the center of gravity is down.

Trade isn’t rescuing anyone. Exports 46.2 and Imports 48.9 improved m/m but remain below 50—consistent with a global manufacturing downswing and domestic demand caution. Add in policy frictions—tariffs, regulatory churn, and a shutdown—and the path from “too low inventories” to genuinely higher orders is blocked by real‑world frictions, not just sentiment.

What This Means for Markets

• Rates and duration: Sub‑50 PMI for most of the year and contracting employment argue for a softer growth impulse ahead. If prices remain sticky at 58.5, the curve stays volatile, but growth signals favor a modest duration bid on weakness. Watch for term premium swings as policy rhetoric toggles between inflation vigilance and growth risk.

• Equities:

• Credit: Rising input costs with weakening orders is classic spread‑widening material for lower‑quality issuers. Tilt toward higher‑quality IG in cyclical industries; be selective in high yield where inventory or tariff sensitivity is high.

• Commodities: Persistent cost prints suggest sticky upstream pricing, but downstream demand is soft. Favor relative value rather than outright beta.

• Macro signals to watch next: whether Production converges down toward New Orders, stabilization in Employment, and any reversal in Supplier Deliveries back above 50. If backlogs keep falling and orders don’t turn, output will follow—and earnings revisions with it.

The Investor Takeaway

Strip out the gloss and you’re left with this: Production at 51.4 is running on fumes—backlog liquidation—while the demand engine misfires (New Orders 47.4, Backlog 44.0, Employment 44.0). Prices 58.5 keeps the pressure on margins, and breadth remains decisively negative (4 expanding, 11 contracting). Position for late‑cycle dynamics: upgrade quality, favor cash‑rich cyclicals with real pricing power, keep duration optionality, and stay skeptical of “too low inventories” as a bull case until orders—not headlines—turn.