The latest ISM Manufacturing PMI for the US, released on November 3, 2025, registered at 48.70, down from 49.10 in October and missing the consensus estimate of 49.50. This figure indicates contraction in the manufacturing sector for the second month running, a notable shift from the expansionary readings earlier this year. The data, sourced from the Sigmanomics database, covers the entire US manufacturing base and reflects conditions as of late October 2025.

Drivers this month

• New orders declined, contributing -0.30 points to the index.
• Supplier deliveries slowed, adding 0.10 points, indicating ongoing supply chain delays.
• Employment contracted slightly, subtracting -0.20 points.
• Inventories remained flat, neutral to the overall reading.

Policy pulse

The PMI reading remains below the 50 threshold, signaling contraction and raising concerns for the Federal Reserve’s inflation target. The persistent weakness in manufacturing suggests that monetary policy tightening is cooling demand more than anticipated. The Fed’s benchmark rate currently stands at 5.25%, with markets pricing in a pause or slight cut in early 2026.

Market lens

Immediate reaction: The USD index rose 0.30% in the first hour post-release, reflecting safe-haven demand amid growth concerns. The 2-year Treasury yield fell 4 basis points, signaling a modest easing in short-term rate expectations. Equity futures dipped 0.50%, particularly in industrial sectors.

The ISM Manufacturing PMI is a leading macroeconomic indicator closely watched for signals about economic growth, employment, and inflationary pressures. The November reading of 48.70 contrasts with the 12-month average of 49.50 and the January 2025 high of 50.90, underscoring a weakening manufacturing environment.

Monetary Policy & Financial Conditions

Monetary tightening since mid-2024 has elevated borrowing costs, with the Fed Funds Rate rising from near zero to 5.25%. This has dampened capital expenditure and manufacturing output. The PMI’s contraction aligns with tightening credit conditions and higher input costs, which have squeezed margins.

Fiscal Policy & Government Budget

Federal fiscal policy remains broadly neutral, with no major stimulus or austerity measures enacted recently. The government budget deficit narrowed slightly in Q3 2025, but infrastructure spending continues to support certain manufacturing subsectors. However, fiscal policy has not offset the drag from monetary tightening.

External Shocks & Geopolitical Risks

Global supply chain disruptions persist due to ongoing geopolitical tensions in Eastern Europe and Asia-Pacific regions. Tariffs and trade uncertainties continue to pressure input costs and delivery times. These external shocks contribute to the sluggish PMI reading and cautious business sentiment.

Subcomponents reveal that new orders fell to 46.80, the lowest since mid-2024, while supplier deliveries improved slightly to 52.30, indicating some easing in supply chain bottlenecks. Employment contracted modestly at 47.90, consistent with cautious hiring amid uncertain demand.

Market lens

Immediate reaction: US equity futures declined 0.50%, led by industrial stocks. The USD strengthened modestly, and 2-year Treasury yields dropped 4 basis points, reflecting a slight easing in rate hike expectations.

Looking ahead, the ISM Manufacturing PMI’s trajectory will be shaped by several key factors. Monetary policy is likely to remain restrictive through early 2026, with the Fed signaling a cautious approach to rate cuts. Fiscal policy is expected to stay neutral, offering limited stimulus to offset headwinds.

Bullish scenario (20% probability)

• Supply chain improvements accelerate, boosting new orders and production.
• Monetary policy pivots sooner than expected, easing financial conditions.
• Geopolitical tensions de-escalate, restoring trade confidence.
• PMI rebounds above 50 by Q2 2026, signaling renewed expansion.

Base scenario (55% probability)

• Manufacturing remains in mild contraction or stagnation through early 2026.
• Monetary policy holds steady, with gradual rate cuts starting mid-2026.
• Supply chain issues persist but improve slowly.
• PMI fluctuates around 48-50, reflecting cautious business sentiment.

Bearish scenario (25% probability)

• Further monetary tightening or delayed easing deepens contraction.
• Geopolitical shocks worsen supply disruptions and cost pressures.
• Manufacturing PMI falls below 47, indicating sharper downturn.
• Risk of spillover into broader economic slowdown increases.

The November 2025 ISM Manufacturing PMI reading of 48.70 signals a manufacturing sector under pressure from tighter monetary policy, persistent supply chain challenges, and geopolitical risks. While some easing in supplier deliveries offers a silver lining, the overall contractionary trend tempers near-term growth prospects. Market reactions reflect cautious sentiment, with safe-haven demand supporting the USD and Treasury bonds.

Structural challenges, including labor shortages and technological shifts, continue to reshape the sector’s long-run trajectory. Policymakers face a delicate balance between containing inflation and supporting growth. Investors should monitor upcoming PMI releases closely, as sustained contraction could presage broader economic weakness.

For now, the manufacturing sector remains a barometer of economic resilience amid evolving macroeconomic and geopolitical landscapes.

Selected tradable symbols relevant to this analysis include: TSLA (sensitive to industrial demand), USDCAD (commodity-linked currency affected by manufacturing trends), BTCUSD (risk sentiment proxy), BA (aerospace manufacturing bellwether), and EURUSD (impacted by US growth and Fed policy).