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US Manufacturing Slows as Inventories Surge Amid Demand Drop

Source: US factory activity slows in November, inventory piling up amid softening demand (2025-11-22)

In November 2025, U.S. factory activity experienced its slowest growth in four months, with the manufacturing PMI declining to 51.9 from 52.5 in October, signaling a cooling manufacturing sector. This slowdown is primarily driven by rising costs due to tariffs, which have increased input prices and dampened demand, leading to a record buildup of unsold inventories. Despite a boost in services activity, the manufacturing sector faces significant challenges, including declining new orders and rising stockpiles, which could threaten future output and economic growth. Recent data reveal that manufacturing accounts for approximately 10.2% of the U.S. economy, making these trends critical for overall economic health. Additionally, the Federal Reserve's recent decision to hold interest rates steady reflects cautious optimism amid inflation pressures, but persistent supply chain disruptions continue to impact manufacturing. Notably, the U.S. government has maintained tariffs on key imports, citing national security and trade balance concerns, though critics argue these measures are contributing to inflation and slowing growth. Meanwhile, global manufacturing indices show mixed signals, with China’s manufacturing PMI stabilizing at 50.5, indicating modest growth, and the Eurozone experiencing a slight contraction. Experts warn that if inventory levels remain high and demand does not pick up, manufacturers may need to reduce production further, potentially leading to layoffs and a slowdown in economic momentum. The Biden administration is exploring policies to stimulate manufacturing, including incentives for innovation and supply chain resilience, aiming to counteract the negative effects of tariffs and softening global demand. As the U.S. navigates these complex economic dynamics, businesses and policymakers are closely monitoring indicators to prevent a potential recession, emphasizing the importance of adaptive strategies in an uncertain global environment.

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