Fifth Month of U.S. Manufacturing Contraction

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American factory activity contracted in December according to the Institute for Supply Management’s (ISM) monthly survey.  The PMI Index fell to 47.2 (a reading above 50.0 indicates expansion), down -0.9 from November, to its lowest level since June 2009 during the Great Recession.  New Orders, Production, Imports, New Export Orders, Employment and other sub-indices all signaled contraction with the exception of Prices and Supplier Deliveries.  “Global trade remains the most significant cross-industry issue,” said ISM, “but there are signs that several industry sectors will improve as a result of the phase-one trade agreement between the U.S. and China.”  Fifteen of eighteen manufacturing sectors reported contraction in December while three—Food, Beverage & Tobacco Products, Miscellaneous Manufacturing and Computer & Electronic Products—grew.  Comments by survey respondents included:

  • “Backlog of orders is shrinking due to new order pace continuing to fall.” (Computer & Electronic Products)
  • “Starting to see suppliers try to pass on costs associated with tariffs.”  (Food, Beverage & Tobacco Products)
  • “Down month-to-month, but up over last year.”  (Miscellaneous Manufacturing)
  • “Anticipated large export orders did not materialize.”  (Fabricated Metal Products)
  • “…overall customer market has softened, resulting in corrections to near-term production schedules…” (Machinery)

See the full report here.

 

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