WASHINGTON (Reuters) - U.S. manufacturing activity improved in November, with orders growing for the first time in eight months and factories facing significantly lower prices for inputs.

The Institute for Supply Management (ISM) said on Monday

its manufacturing PMI increased to 48.4 last month from 46.5 in October, which was the lowest level since July 2023.

A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.3% of the economy.

Economists polled by Reuters had forecast the PMI rising to 47.5. The gain in the PMI tracked similar increases in other sentiment surveys, which have risen on hopes of more business-friendly policies from the incoming Trump administration.

Nonetheless, November marked the eighth straight month that the PMI remained below the 50 threshold, but above the 42.5 level that the ISM says over time generally indicates an expansion of the overall economy.

The PMI has suggested that manufacturing remains stuck in deep recession following hefty interest rate hikes from the Federal Reserve in 2022 and 2023 to tame inflation. It has, however, not been all doom and gloom.

Business spending on equipment has notched two consecutive quarters of strong growth, reflecting in part an artificial intelligence boom and demand for commercial aircraft. The U.S. central bank started easing monetary policy in September, and a third rate cut is expected this month.

The ISM survey's forward-looking new orders sub-index increased to 50.4, expanding for the first time since March, from 47.1 in October. The production index was, however, little changed at depressed levels. Its measure of prices paid by manufacturers dropped to 50.3 from 54.8 in October.

That suggests goods prices still have more room to fall, though higher tariffs for imports could see a reversal.

President-elect Donald Trump said last week he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China, on his first day in office.

The survey's gauge of supplier deliveries dropped to 48.7 from 52.0 in October. A reading above 50 indicates slower deliveries. Factory employment continued to improve, though remaining at subdued levels. The survey's manufacturing employment measure climbed to 48.1 from 44.4 in October.

That is consistent with an anticipated acceleration in nonfarm payrolls growth in November, after a strike by factory workers at Boeing and another aerospace company tanked manufacturing employment in October. Job growth in October was also restrained by Hurricanes Helene and Milton.

The Labor Department's strike report last Friday confirmed that the 38,000 aerospace employees had returned to work in late October and early November.

Early results of a Reuters survey of economists estimated payrolls increasing by 195,000 jobs in November after rising by 12,000 in October, the fewest since December 2020.

The closely watched employment report for November is due to be released on Friday.