"While the November manufacturing report indicates that the US factory sector continues to enjoy recovery from a deep six-quarter contraction, this report, along with other recent data, suggests that the pace of output growth will slow from the relatively rapid clip seen in the third quarter," says Cliff Waldman, economist for the Manufacturers Alliance/MAPI in Arlington, VA. According to Waldman, much of the preceding months' growth was catalyzed by an inventory turn along with a number of short-term fiscal stimulus programs.

A reading above 50% indicates the manufacturing economy is generally expanding, while a reading below 50% indicates contraction. Though analysts were disappointed the index did not reach the 55% level they had forecast it would, they remain generally optimistic the expansion will continue, noting the figure has climbed significantly from the low point of 32.9% it reached in December 2008. Twelve of the 18 manufacturing industries tracked by ISM reported growth in November, while five reported contraction and one remained unchanged.

Waldman attributes the November fallback to slower growth in the backlog of orders. He says the slippage suggests manufacturing growth will continue to be less than what would be expected in the wake of a deep recession, at least over the near term. In his opinion, the factory sector is still struggling to gain a sustainable post-recession growth path. "The clear turn in the US and global economies has pulled manufacturing out of a deep slump," he observes. "But a deleveraging US consumer and an uneven global economic recovery will make it difficult for US factory output to grow at the rate that is needed to absorb historic excess capacity anytime soon."