2026-01-06
U.S. December ISM Manufacturing PMI Continues to Contract, Hits 14-Month Low
The Institute for Supply Management (ISM) in the U.S. reported that the December Manufacturing Purchasing Managers’ Index (PMI) fell to 47.9, down 0.3 points from November’s 48.2. This marks the 10th consecutive month below the 50-point expansion-contraction threshold, hitting the lowest level in 2025 and a 14-month low. The data indicate that U.S. manufacturing activity is contracting at an accelerated pace. While the overall economy continues to expand, the manufacturing sector has been weak for several months, highlighting significant challenges for the industry.
Detailed data performance:
New Orders Index: 47.7, slightly up from 47.4 in November, but still contracting for the fourth consecutive month.
Production Index: 51.0, down from 51.4 last month, still expanding but at a slower pace.
Employment Index: 44.9, up from 44.0 in November, contraction pace slightly eased.
Supplier Deliveries Index: 50.8, up from 49.3 last month, indicating slower delivery times.
Inventories Index: 45.2, down from 48.9 in November, the fastest decline since October 2024.
Prices Index: 58.5, unchanged from last month, with raw material prices rising for 15 consecutive months.
New Export Orders: 46.8, up from 46.2 last month, still contracting for 10 consecutive months.
Imports Index: 44.6, down from 48.9 last month, contracting for the ninth consecutive month.
These figures reflect weak demand, inventory pressures, and trade friction impacts, such as tariffs leading to order declines and supply chain instability. Companies are largely responding with workforce reductions and inventory control strategies to manage uncertainty. Only a few industries, such as computers and electronic products, showed growth, while 15 other sectors, including chemicals, machinery, and transportation equipment, continued to shrink.
The December ISM Manufacturing PMI continued to deteriorate, highlighting that U.S. manufacturing is in a downturn, weighed down by weak demand, tariffs, and high interest rates. In the short term (1–2 months), manufacturing is unlikely to escape contraction, with order improvements unclear, potentially weighing on industrial stocks. If the Federal Reserve cuts rates, some relief may emerge. In the medium term (within six months), trade policy uncertainty and geopolitical factors persist, and recovery will depend on stronger demand and policy support. Market volatility may increase, so investors should monitor service sector data for a more balanced perspective.
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