U.S. Factory Activity Contracted Again in December -- ISM
January 03 2024 - 10:56AM
Dow Jones News
By Joshua Kirby
Activity among U.S. manufacturers continued to contract in
December, albeit at a slower pace, as new orders fell back,
according to a sector index.
The Institute for Supply Management said Wednesday that its
index of manufacturing activity rose to 47.4 from 46.7 in
November.
Economists polled by The Wall Street Journal had forecast the
index to rise a little less steeply to 47.2. A reading above 48.7
over a period of time in the ISM index generally indicates
expansion in the U.S. economy.
The reading marks a 14th straight month of decline, reversing
some of the gains made in the previous period of growth lasting
more than two years, according to the ISM index.
"The U.S. manufacturing sector continued to contract, but at a
slightly slower rate in December as compared to November. Companies
are still managing outputs appropriately as order softness
continues," said Timothy Fiore, chairman of the ISM Manufacturing
Business Survey Committee.
The index of new orders sank to 47.1 in December from 48.3 in
November, though production improved a little, rising to 50.3 from
48.5 previously. The employment index also increased, coming in at
48.1 from 45.8 previously.
"Demand remains soft, and production execution is stable
compared to November, as panelists' companies continue to manage
outputs, material inputs and labor costs," Fiore said.
None of the six biggest manufacturing industries booked growth
in December, with three--machinery, petroleum and coal, and
computer and electronic products--booking an index reading below
45. The only industry to report growth was primary metals, while
those booking the sharpest contractions included apparel, plastics
and rubber products, machinery, paper, and wood.
Business is slowing and inventories are growing, noted one
respondent from the machinery sector.
Some companies may be holding off on capital investment pending
an expected cut to interest rates by the Federal Reserve, said
another respondent, active in the computers and electronics
sector.
"As budgets get approval after the start of the calendar year,
this should help drive investment and increase manufacturing
activity once again," the respondent said.
Write to Joshua Kirby at joshua.kirby@wsj.com;
@joshualeokirby
(END) Dow Jones Newswires
January 03, 2024 10:41 ET (15:41 GMT)
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