U.S. Manufacturing Growth and New Orders Hit Snag in December

Manufacturing expanded in December and the general U.S. economy grew for the 116th consecutive month, according to the nation’s supply executives in the latest Manufacturing ISM Report On Business. The December PMI registered at 54.1 percent, a 5.2 percent decrease from the November reading of 59.3 percent.

The Report On Business measures its data using the Purchasing Manager’s Index (PMI), which is an indicator of economic health in the manufacturing sector. A reading above 50 percent indicates that the manufacturing economy is generally expanding, while below 50 percent indicates that it is generally contracting.

“Comments from the panel reflect continued expanding business strength, but at much lower levels. Demand softened, with the New Orders Index retreating to recent low levels, the Customers’ Inventories Index remaining too low-a positive heading into the first quarter of 2019-and the Backlog of Orders declining to a zero-expansion level,” said Timothy R. Fiore, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee. “Consumption continued to strengthen, with production and employment still expanding, but at much lower levels compared to prior periods. Inputs-expressed as supplier deliveries, inventories and imports-softened as well, with suppliers improving delivery performance, and inventories and imports declining.

“Exports continue to expand, but at low levels consistent with November. Price increases relaxed to levels not seen since June 2017, when the index registered 53 percent. The manufacturing community continues to expand, but at much lower levels and at a sharp decline from November,” Fiore added.

Of the 18 manufacturing industries, 11 reported growth in December, in the following order: Textile mills; apparel, leather & allied products; machinery; transportation equipment; computer & electronic products; wood products; chemical products; food, beverage & tobacco products; miscellaneous manufacturing; electrical equipment, appliances & components; and primary metals.

The six industries reporting contraction in December, in the following order, are: Printing & related support activities; fabricated metal products; nonmetallic mineral products; petroleum & coal products; paper products; and plastics & rubber products.

Commodities Up in Price

Chemicals; electrical components; electronic components; freight; construction labor; metal-based products; natural gas; pet resin; printed circuit boards; steel; and steel-based products.

Commodities Down in Price

Aluminum; caustic soda; crude oil; gasoline; steel; and hot rolled steel.

Commodities in Short Supply

Capacitors; electronic components; hardwood; labor; resistors; steel; and steel-based products.

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