ISM: Manufacturing PMI Drops 2.4 Points

Economic activity in the manufacturing sector grew in December, though the PMI dropped 2.4 points from November.
It is the first time since the fourth quarter of 2020 that annualized growth rate didn’t outperform expectations, according to the Second Quarter Baird-MDM Industrial Distribution Survey.

Economic activity in the manufacturing sector grew in December, with the overall economy seeing a 19th consecutive month of growth, according to supply executives in the latest Manufacturing ISM Report on Business.

The report was issued by Timothy R. Fiore, CPSM, C.P.M., Chair of the ISM Manufacturing Business Survey Committee.

The December Manufacturing PMI registered 58.7%, a decrease of 2.4 percentage points from the November reading of 61.1%.

The New Orders Index registered 60.4%, down 1.1 percentage points compared to the November reading of 61.5%.

The Production Index registered 59.2%, a decrease of 2.3 percentage points compared to the November reading of 61.5%.

The Prices Index registered 68.2%, down 14.2 percentage points compared to the November figure of 82.4%.

The Backlog of Orders Index registered 62.8%, 0.9 percentage point higher than the November reading of 61.9%.

The Employment Index registered 54.2%, 0.9 percentage point higher compared to the November reading of 53.3%.

The Supplier Deliveries Index registered 64.9%, down 7.3 percentage points from the November figure of 72.2%.

The Inventories Index registered 54.7%, 2.1 percentage points lower than the November reading of 56.8%.

The New Export Orders Index registered 53.6%, a decrease of 0.4 percentage point compared to the November reading of 54%.

The Imports Index registered 53.8%, a 1.2-percentage point increase from the November reading of 52.6%.

“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with indications of improvements in labor resources and supplier delivery performance,” Fiore said. “Shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products continue to plague reliable consumption. Coronavirus pandemic-related global issues — worker absenteeism, short-term shutdowns due to parts shortages, employee turnover and overseas supply chain problems — continue to impact manufacturing. However, panel sentiment remains strongly optimistic, with six positive growth comments for every cautious comment, down slightly from November. ISM’s Semiannual Economic Forecast, released in December, indicates a strong 2022 performance expectation in terms of revenue growth and profitability.”

Fiore said all of the six biggest manufacturing industries — Chemical Products; Fabricated Metal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; and Petroleum & Coal Products, in that order — registered “moderate-to-strong growth” in December.

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