U.S. ISM Manufacturing PMI Edges Higher in December
by:Tom Moeller
|in:Economy in Brief
Summary
- Index is highest since September, but indicates reduced activity for last 14 months.
- Jobs reading improves but other component changes are mixed.
- Prices index declines m/m but stays on sideways trend.
The Purchasing Managers Index of activity in the manufacturing sector rose to 47.4 in December after holding steady m/m at 46.7 in November, according to the Institute for Supply Management. Remaining below 50, the figure has indicated contraction in U.S. manufacturing sector activity since November 2022. The index peaked at 61.9 in May 2021. During all of 2023, the index averaged 47.1 after having averaged 53.5 in 2022. A December reading of 47.2 had been expected in the Action Economics Forecast Survey.
Movement amongst the component series was mixed last month. The employment measure rose to 48.1 from 45.8 in November. It was the highest level in three months. Twelve percent of survey participants reported increased employment while 18.0% reported decline. The production index improved to 50.3 from 48.5. It remained below the recent high of 52,5 in in October. Sixteen percent of respondents reported higher production while 23.0% indicated decline. The supplier delivery reading of 47.0 compared to 46.2 in November. Five percent of respondents reported slower delivery speeds while eleven percent reported quickening.
Edging lower, the new orders index fell to 47.1 in December from 48.3 in November. It remained up from a low of 42.6 in May. Sixteen percent (NSA) of survey participants reported higher new orders while 27.0% reported decline. The inventories reading slipped to 44.3 from 44.8 in November. Eleven percent of survey participants reported higher inventories while 26.1% reported a decline.
The prices index declined to 45.2 (NSA) last month and fully reversed the m/m November increase to 49.9. The index peaked at 92.1 in June 2021 and averaged 46.6 last year versus 64.8 in 2022. Fourteen percent of respondents reported higher prices last month while 23.9% reported price declines.
In other series, the export index surged to 49.9 in December from 46.0 in November. It was the highest level since May but remained below the most recent high of 57.1 in February 2022. The imports series was little-changed at 46.4 and remained below the most recent high of 49.9 in April. After declining in November, the order backlog index rebounded to 45.3 last month, its highest level since October 2022.
The ISM figures are based on responses from over 400 purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states.
These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver's AS1REPNA database.
Heading for a Soft Landing? from Richmond Fed Chairman Tom Barkin is available here.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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