The ISM Manufacturing PMI in the US fell to 54.1 in December, the weakest since November 2016, from 59.3 in November and missing market expectations of 57.9. It was the largest monthly drop since October 2008 as growth in new orders, production and employment slowed sharply.
The New Orders Index posted the biggest monthly decline since January 2014, dropping to its lowest level since August 2016 (51.1 vs 62.1 in November). In addition, a slowdown was recorded in output growth (54.3 vs 60.6) and the pace of job creation (56.2 vs 58.4). Other indexes also fell: supplier deliveries (57.5 vs 62.5); inventories (51.2 vs 52.9); and prices (54.9 vs 60.7).
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“Comments from the panel reflect continued expanding business strength, but at much lower levels. Demand softened, with the New Orders Index retreating to recent low levels, the Customers’ Inventories Index remaining too low — a positive heading into the first quarter of 2019 — and the Backlog of Orders declining to a zero-expansion level. Consumption continued to strengthen, with production and employment still expanding, but at much lower levels compared to prior periods. Inputs — expressed as supplier deliveries, inventories and imports — softened as well, with suppliers improving delivery performance, and inventories and imports declining.
Exports continue to expand, but at low levels consistent with November. Price increases relaxed to levels not seen since June 2017, when the index registered 53 percent. The manufacturing community continues to expand, but at much lower levels and at a sharp decline from November,” says Fiore.
Of the 18 manufacturing industries, 11 reported growth in December, in the following order: Textile Mills; Apparel, Leather & Allied Products; Machinery; Transportation Equipment; Computer & Electronic Products; Wood Products; Chemical Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; and Primary Metals. The six industries reporting contraction in December — in the following order — are: Printing & Related Support Activities; Fabricated Metal Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Paper Products; and Plastics & Rubber Products.