The U.S. manufacturing sector contracted in December for the tenth month in a row, following a two-month expansion preceded by 26 straight months of contraction. The ISM Manufacturing PMI registered 47.9%, edging down 0.3 percentage points (pp) from 48.2% recorded in November. (A manufacturing PMI above 50%, over a period of time, generally indicates an expansion of the overall economy.)
The overall economy continued in expansion for the 68th month after one month of contraction in April 2020.
The Employment Index registered 44.9% in December, 0.9 pp higher than November’s reading of 44%. Prices Index remained in expansion (or “increasing”) territory, registering 58.6% in December, matching its November reading and indicating raw materials prices increased for the 15th straight month. New Orders Index contracted for the fourth consecutive month in December after one month of expansion, registering 47.7%, an increase of 0.3 pp compared to November’s figure of 47.4%. This reading is below the 12-month moving average (48.5%) for the New Orders Index.
New Export Orders Index contracted in December, registering 46.8%, up 0.6 pp from November’s reading of 46.2%. “Despite a slight improvement in the New Export Orders Index, trade frictions continue to weigh on demand. Many panelists still report softer international orders tied to tariffs and ongoing uncertainty around U.S. economic policy, with a ratio of 1.5 negative comments for every positive one,” said Susan Spence, MBA, Chair of the Institute for Supply Management.
Imports Index remained in contraction for the ninth straight month in December, falling 4.3 pp to 44.6% after expanding for three straight months. “Tariff-related pricing pressures are continuing to result in softer demand,” says Spence.
The Inventories Index registered 45.2% in December, down 3.7 pp compared to the reading of 48.9% in November. Of 18 manufacturing industries, two reported higher inventories in October.
Read the ISM release.
