For the ninth consecutive month and the 25th time in the last 26 months, economic activity in the manufacturing sector contracted, according to the Jan 2 ISM Report on Business.
The Manufacturing PMI registered 49.3% in December, 0.9 percentage point higher compared to the 48.4% recorded in November.
The overall economy continued in expansion for the 56th month after one month of contraction in April 2020.
“Demand showed signs of improving, while output stabilized and inputs stayed accommodative,” said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee. "Demand improved, production execution met November's performance (and companies' plans), de-staffing continued (but should end soon), and price growth was marginal.
"Fifty-two percent of manufacturing gross domestic product (GDP) contracted in December, down from 66% in November. The share of manufacturing sector GDP registering a composite PMI® calculation at or below 45% (a good barometer of overall manufacturing weakness) was 49% in December, a 1-percentage point increase compared to the 48% reported in November. None of the six largest manufacturing industries expanded in December, down from two in November."
The Index numbers are as follows:
The Supplier Deliveries Index indicated marginally slower deliveries, registering 50.1%, 1.4 percentage points higher than the 48.7% recorded in November.
The Inventories Index registered 48.4%, up 0.3 percentage point compared to November's reading of 48.1%.
The New Orders Index continued in expansion territory for the second month after seven months of contraction, strengthening to 52.5%, 2.1 percentage points higher than the 50.4% recorded in November.
The Production Index (50.3%) is 3.5 percentage points higher than November's figure of 46.8%. The index returned to expansion after six months in contraction.
The Prices Index continued in expansion (or 'increasing') territory, registering 52.5 percent, up 2.2 percentage points compared to the reading of 50.3 percent in November.
The Backlog of Orders Index registered 45.9%, up 4.1 percentage points compared to the 41.8% recorded in November.
The Employment Index registered 45.3%, down 2.8 percentage points from November's figure of 48.1%.
The New Export Orders Index's 'unchanged' reading of 50% is 1.3 percentage points higher than the 48.7% registered in November.
The Imports Index remained in contraction territory in December, registering 49.7%, 2.1 percentage points higher than November's reading of 47.6%."
What Respondents are Saying
- "Slightly lower due to seasonality and end-of-year destocking." [Chemical Products]
- "Automotive and powersport volume decreases." [Transportation Equipment]
- "We are seeing a softening in sales. This is concerning as it's our peak season." [Food, Beverage & Tobacco Products]
- "We are constrained by technical labor, despite higher-than-normal backlog." [Computer & Electronic Products]
- "Significant slowdown in production requirements in the last two months of the year." [Machinery]
- "Order levels well below forecast projections." [Fabricated Metal Products]
- "The increase in new orders has our plant at full capacity." [Electrical Equipment, Appliances & Components]
- "There is definitely an uptick this month, though not a stable one." [Primary Metals]
- "The orders have increased slightly due to seasonal restocking." [Plastics & Rubber Products]
