U.S. Manufacturing Contracts for 9th Month, PMI® Rises to 49.3% in December

Manufacturing PMI® Indicates Continued Contraction

The U.S. manufacturing sector remained in contraction during December, marking the ninth consecutive month of decline, according to the latest Manufacturing ISM® Report On Business®. The Manufacturing PMI® rose slightly to 49.3%, up from 48.4% in November, signaling a slower pace of contraction as demand and production improved.

Key Indicators Show Mixed Results

While the manufacturing sector continues to struggle, several indices suggest potential stabilization. The New Orders Index climbed to 52.5%, up 2.1 percentage points from November, indicating growth for the second straight month after a prolonged downturn. Production returned to expansion territory, registering 50.3%, a notable 3.5 percentage point increase from November’s 46.8%.

However, employment remains a weak spot, with the Employment Index dropping to 45.3%, reflecting continued workforce reductions as companies align for 2025. This marks a 2.8 percentage point decline from November’s 48.1%. Meanwhile, the Backlog of Orders Index rose to 45.9%, up 4.1 percentage points, although it remains in contraction.

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.

More Information in our Economic Calendar.