In a report released by the Institute for Supply Management (ISM) on Wednesday, economic activity within the US manufacturing sector continued its contraction for the 14th consecutive month in December. This follows a 28-month period of growth, indicating a protracted decline in manufacturing.
The Manufacturing Purchasing Managers’ Index (PMI) registered at 47.4 percent for December, a slight improvement from November’s 46.7 percent. A PMI above 48.7 percent typically indicates an expansion of the overall economy, emphasizing the sustained contraction.
Key findings from the report include the New Orders Index remaining in contraction territory at 47.1 percent, the Production Index showing a modest increase at 50.3 percent, and the Prices Index dropping to 45.2 percent. The report notes that the Employment Index rose to 48.1 percent, indicating a slight improvement in employment conditions.
Notably, the Supplier Deliveries Index increased to 47 percent, suggesting slower deliveries, which is common in an improving economy with heightened customer demand.
The report indicates a decline in the Inventories Index to 44.3 percent, and while the New Export Orders Index improved to 49.9 percent, the Imports Index remained in contraction territory at 46.4 percent.
Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, stated, “The U.S. manufacturing sector continued to contract, but at a slightly slower rate in December as compared to November.” Fiore emphasized that companies are adjusting outputs amid softening orders, and demand remains subdued.
Moreover, the report highlighted that none of the six biggest manufacturing industries experienced growth in December. The only sector to report growth was Primary Metals, while 16 industries, including Printing, Apparel, Machinery, and Transportation Equipment, reported contraction.
Respondents to the report offered insights into their respective industries, with some expressing optimism for 2024, anticipating increased spending on capital investments and a strong first quarter. However, others cited challenges such as slowing business, growing inventories, and the impact of higher financing costs on demand for residential investment.
As the manufacturing sector navigates challenges, the report underscores the complexity of economic conditions and the varying experiences across different industries within the sector.