The 2020 Mid-Year Economic Update_long

Manufacturing Sector Ticks Up in December

The December PMI registered 60.7%, an increase of 3.2% from the November reading of 57.5% and an eighth consecutive month of expansion.
ISM December 2020

Economic activity in the manufacturing sector improved in December, and the overall economy grew for the eighth consecutive month — after it had dipped significantly in the early stages of the coronavirus — according to the nation’s supply executives in the latest Manufacturing ISM Report on Business.

The December Manufacturing PMI registered 60.7%, up 3.2% from the November reading of 57.5%. This figure indicates expansion in the overall economy for the eighth month in a row after contracting in March, April, and May, which ended a period of 131 consecutive months of growth. The New Orders Index registered 67.9%, up 2.8% from the November reading of 65.1%. The Production Index registered 64.8%, an increase of 4% compared to the November reading of 60.8%. The Backlog of Orders Index registered 59.1%, 2.2% higher compared to the November reading of 56.9%. The Employment Index returned to expansion territory at 51.5%, 3.1% higher from the November reading of 48.4%. The Supplier Deliveries Index registered 67.6%, up 5.9% from the November figure of 61.7%.

The Inventories Index registered 51.6%, 0.4%age point higher than the November reading of 51.2%. The Prices Index registered 77.6%, up 12.2% compared to the November reading of 65.4%. The New Export Orders Index registered 57.5%, a decrease of 0.3%age point compared to the November reading of 57.8%. The Imports Index registered 54.6%, a 0.5-percentage point decrease from the November reading of 55.1%.”

“The manufacturing economy continued its recovery in December,” said Timothy R. Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee.. Survey Committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are causing strains that are limiting manufacturing growth potential. However, panel sentiment remains optimistic (three positive comments for every cautious comment), an improvement compared to November.”

Of the 18 manufacturing industries, 16 reported growth in December, in the following order: Apparel, Leather & Allied Products; Furniture & Related Products; Wood Products; Fabricated Metal Products; Machinery; Computer & Electronic Products; Transportation Equipment; Plastics & Rubber Products; Paper Products; Chemical Products; Petroleum & Coal Products; Primary Metals; Textile Mills; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. The two industries reporting contraction in December are: Printing & Related Support Activities; and Nonmetallic Mineral Products.

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