Manufacturing activity in the United States contracted at a more moderate pace in December, as reported by the Institute for Supply Management (ISM) on Friday. The ISM's manufacturing Purchasing Managers Index (PMI) edged up to 49.3 in December from 48.4 in November. Despite this increase, any reading below 50 still signifies contraction. Economists anticipated the index would remain steady at 48.4.
This unexpected rise brought the manufacturing PMI to its highest point since March 2024, when it was 50.3. The increase can be attributed to a boost in new orders and a recovery in production levels.
Specifically, the new orders index improved to 52.5 in December from 50.4 in November, and the production index increased to 50.3 from 46.8 over the same period.
However, the report showed that the employment index fell to 45.3 in December from 48.1 in November, suggesting a quicker decline in manufacturing employment. Meanwhile, the prices index rose from 50.3 in November to 52.5 in December, indicating a faster rate of price increase.
Looking ahead, the ISM plans to release a separate report on service sector activity for December next Tuesday. Projections suggest the services PMI will increase to 53.5 in December from November’s 52.1, with readings above 50 reflecting growth.
