US Manufacturing Activity Report for December

US manufacturing activity showed slight improvement in December, although it remained in contraction territory. Orders expanded for the second consecutive month as companies prepare for incoming President Donald Trump’s administration, which may implement more business-friendly policies such as looser regulations and tax cuts.

The Institute for Supply Management’s (ISM) purchasing managers’ index for the manufacturing sector increased to 49.3 last month, up from 48.4 in November. This rise defied economist predictions of a modest dip to 48.2. A reading below 50 typically indicates contraction in the industry, which comprises over 10% of the overall US economy.

Notably, this marks the ninth consecutive month that the measure has stayed below the 50-point threshold, though it is significantly above 42.5, a level that suggests broader economic expansion.

The forward-looking new orders sub-index rose to 52.5, up from 50.4 the previous month. Additionally, a separate index focused on production also saw an increase, edging up to 50.3 from 46.8 in November.

Furthermore, ISM’s measure of prices paid by manufacturers climbed to 52.5, rising from 50.3.

In summary, ISM Business Survey Committee Chair Timothy Fiore stated: “US manufacturing activity contracted again in December, but at a slower rate compared to November. Demand showed signs of improving, while output stabilized and inputs stayed accommodative.”