Economic activity in the U.S. manufacturing sector grew for the 16th consecutive month in November, though at a slightly slower pace than the previous month, according to a new survey of purchasing managers.

Manufacturing has been one of the strongest sectors of the United States economy since the recession officially ended, and last month the trend continued, according to the Institute for Supply Management’s (ISM) latest manufacturing Report on Business, released yesterday.

The ISM’s purchasing managers’ index (PMI), a key monthly indicator for the factory sector, totaled 56.6 percent in November, down from 56.9 percent in October. The .3 percent drop in the PMI shows that while manufacturing is still expanding, the rate of growth is slowing down month-to-month. Readings higher than 50 percent indicate growth, while readings below 50 percent indicate contraction.

November marks the 16th consecutive month of U.S. factory growth.

“November’s rate of growth is the second fastest in the last six months,” Norbert Ore, chair of the ISM Manufacturing Business Survey Committee, said in a statement.

The ISM index peaked this year at 60.4 percent in April as many U.S. companies restocked inventories or made other purchases that were delayed during the recession. Although activity tapered off over the summer, the sector is still growing.

“At 56.6, the PMI is comfortably in the middle of the growth range,” Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI, wrote in an analysis of the ISM report.

Ore notes that the manufacturing sector “continues to benefit from the recovery in autos,” while housing remained weak in November.

“Automakers are behind much of the growth in manufacturing,” the Associated Press explains. “Ford, General Motors and Chrysler all reported double-digit sales increases for November. The news is particularly welcome for GM, which just returned as a public company.” (See Weekly Industry Crib Sheet: GM Launches Landmark IPO)

Of the 18 industries tracked by the ISM, 10 expanded in November: computer and electronic products; petroleum and coal products; apparel, leather and allied products; machinery; fabricated metal products; plastics and rubber products; transportation equipment; electrical equipment, appliances and components; chemical products; and primary metals.

“Manufacturing was fuelled by accelerating growth in imports, inventories and supplier deliveries,” the Financial Times notes (subscription required). “However, employment, production and new orders grew more slowly in November.”

The index of new orders, a strong indicator of future sales, fell 2.3 percent in November to 56.6 percent.

The backlog of orders, which tends to decline as demand weakens and rise as demand strengthens, remained flat at 46 percent.

The inventories index rose from 53.9 percent to 56.7 percent, likely signaling that manufacturers were unable to sell their products as quickly.

Employment dipped .2 percent to 57.5 percent.

Meanwhile, prices moderated slightly from 71 percent to 69.5 percent, but supply executives expressed concerns regarding pricing pressures. “The list of commodities in short supply increased, though short supply items are not yet posing significant problems,” according to Ore.

Production also fell, from 62.7 percent in October to 55 percent in November.

“After a surge early in the year driven by the inventory swing and material shortages caused by the inability to return to production fast enough, the pace of manufacturing activity has slowed at year-end to a moderate, more sustainable rate,” according to Meckstroth.

The ISM’s report of continued manufacturing growth comes on the heels of the U.S. Department of Commerce last week revising its estimate of gross domestic product growth in the third quarter to an annual rate of 2.5 percent, up from an earlier estimate of 2 percent and the 1.7 percent recorded in the second quarter.

“Signs that manufacturing employment will grow, slowing supplier deliveries, low customer inventories and a foreign trade balance that is turning more in the United States’ favor are all hopeful indicators coming from the November report on manufacturing,” Meckstroth added.

Earlier

Manufacturing Growth Accelerates in October

Manufacturing Grows at Fastest Pace in 6 Years

U.S. Economy Grows at Slightly Faster Pace in Q3

Weekly Industry Crib Sheet: GDP Growth Slows

Weekly Industry Crib Sheet: GM Launches Largest IPO in U.S. History

Resources

November 2010 Manufacturing ISM Report on Business
Institute for Supply Management, Dec. 1, 2010

MAPI Analysis on ISM Index: Activity Slowing to ‘Moderate, More Sustainable Rate’
by Daniel Meckstroth
Manufacturers Alliance/MAPI, Dec. 1, 2010

Economy Appears Headed for Strong Finish for 2010
The Associated Press, Dec. 1, 2010

US Manufacturing Data Point to Recovery (subscription required)
by Alan Rappeport
Financial Times, Dec. 1, 2010

Gross Domestic Product, 3rd Quarter 2010 (Second Estimate)
U.S. Department of Commerce, Nov. 23, 2010