“U.S. manufacturing contracts for the ninth month, but rising new orders and production hint at potential stabilization. Employment continues to decline.”, — write: www.fxempire.com
Prices and Supply Chain Metrics Reflect Stability The Prices Index increased to 52.5%, up from 50.3%, suggesting mild price growth. Supplier deliveries slightly slowed, registering 50.1%, indicating a marginally tighter supply chain, often seen as a sign of strengthening demand. Inventory levels improved modestly, rising to 48.4% from 48.1% but staying below the expansion threshold.
Export activity showed improvement, with the New Export Orders Index reaching 50%, up 1.3 percentage points from November. Imports, while still contracting, moved closer to stability at 49.7%.
Industry Performance Remains Mixed Of the seven manufacturing industries reporting growth in December, primary metals and electrical equipment led the gains. Conversely, textile mills, fabricated metals, and machinery were among the seven sectors experiencing continued contraction.
Timothy R. Fiore, Chair of the ISM® Manufacturing Business Survey Committee, noted that while the sector is still contracting, the rate of decline is slowing. “Demand is improving, output is stabilizing, and price growth is marginal,” Fiore said. Notably, 52% of manufacturing GDP contracted in December, down from 66% in November.
Market Forecast: Gradual Recovery with Persistent Weakness While the December PMI® data points to ongoing contraction, improving new orders and stabilizing production suggest the worst may be easing. However, employment declines and contraction in key industries imply lingering weakness in early 2025. Traders should anticipate a cautious recovery, with manufacturing performance heavily dependent on sustained demand growth and inventory replenishment.