The manufacturing economy finished full-year 2023 in contraction, registering a PMI of 47.4% in December the Institute for Supply Management (ISM) reported today. That’s makes for a 0.7-point increase from the 46.7% recorded in November, and 14 consecutive months of contraction following a 28-month period of growth.
Demand remains soft and production execution is stable compared to November, as panelists’ companies continue to manage outputs, material inputs and labor costs. Suppliers continue to have capacity.” says Timothy Fiore, chair of ISM’s Manufacturing Business Survey Committee.
None of the six biggest manufacturing industries registered growth in December.
December New Orders were down 1.2 points to 47.1% from November’s 48.3%.
“Of the six largest manufacturing sectors, only Chemical Products reported increased new orders, a positive indicator for the entire manufacturing industry sector. New order levels contracted at a faster rate compared to November as a result of continuing sluggishness in four capital-focused industries—Computer & Electronic Products; Transportation Equipment (though transitory); Machinery; and Fabricated Metal Products—that are among the seven biggest by share of manufacturing GDP,” Fiore says.
ISM’s Production Index returned to expansion territory in December, registering 50.3%, 1.8 percentage points higher than November’s reading of 48.5%. The November contraction was preceded by two months of expansion. Of the top six industries, Transportation Equipment and Food, Beverage & Tobacco Products expanded in December.
The December Employment Index contracted again in December, but at a slower rate than November, registering 48.1%—2.3 points higher than the November reading of 45.8%. Of the six big manufacturing sectors, Transportation Equipment and Chemical Products expanded.
“Labor management sentiment at Business Survey Committee respondents’ companies continues to indicate a slowdown in hiring and, in December, a continuation of staff-reduction activity. Attrition, freezes and layoffs to reduce head counts was activity similar to November, with layoffs being the most common measure,” says Fiore.
More about the ISM Report On Business: The index is based on a survey of executives in 18 industries. The PMI is considered a leading economic indicator and a barometer of where manufacturing is headed. An index reading above 50% indicates economic expansion, while below 50% shows contraction.
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