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Posted November 21, 2025 at 11:45 am
Manufacturing cooled as unsold goods piled up, but growing demand for services and hopes for Fed rate cuts kept overall business sentiment positive.
US factory activity downshifted to a four-month low in November, with S&P Global’s manufacturing PMI falling, even as service industries picked up pace and fueled business optimism.
S&P Global’s latest survey showed manufacturing momentum cooling, with the PMI dropping to 51.9—missing forecasts and slipping from 52.5 in October. Softer demand led to fewer new orders, pushing factory order growth down to 51.3 and causing a record build-up of unsold goods. That glut signals a potential slowdown ahead if buyers don’t resurface. Persistent tariffs are also making it pricier and trickier for factories to hire, despite government efforts to boost local manufacturing. On the bright side, services are keeping the broader economy in motion: the composite output index climbed to 54.8, and new service orders rang in at 55.0. Optimism is improving too, helped by rate cut hopes, a resolved government shutdown, and fewer political jitters. Still, input costs jumped again—up to 63.1—so inflation remains a headache, and job growth is slowing.
For markets: Mixed signals shape market attitude.
Investors are watching the tug-of-war between slowing factories and brisk service demand to gauge where the economy’s headed next. Stock markets have mostly shrugged off weaker factory data, banking on steady services and the prospect of Fed rate cuts to keep growth on track. Still, with stubborn inflation and unsold inventories piling up, there’s rising chatter that corporate profits could take a hit if the trend sticks.
The bigger picture: Steady services keep growth in check.
With manufacturing losing steam and services carrying the load, the US economy looks more even-keeled than during last year’s factory-led rally. Now, policymakers have to navigate sticky inflation, weaker hiring, and persistently high tariffs. All eyes are on the Fed’s timing for potential rate cuts—decisions that could shape both business confidence and consumer spending as we head into 2026.
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Originally Posted on November 21, 2025 – US Factories Slow While Services Pick Up The Slack
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