Economic activity in the manufacturing sector expanded in December but at a slower rate than in November as the overall economy grew for the 116th consecutive month, according to the Institute for Supply Management Manufacturing Report on Business. The Purchasing Managers’ Index (PMI) declined 5.2 percentage points to 54.1% in December, from November.
The New Orders Index declined 11 percentage points to 51.1%, the Production Index fell 6.3 percentage points to 54.3%, the Employment Index declined 2.2 percentage points to 56.2%, the Suppliers Deliveries Index decreased 5 percentage points to 57.5%, the Inventories Index dropped 1.7 percentage points to 51.2% and the Prices Index declined 5.8 percentage points to 54.9% — indicating higher raw materials prices for the 34th consecutive month.
“Comments from the panel reflect continued expanding business strength but at much lower levels,” said Timothy Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “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. 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 continued to rise but a low levels similar to November, Fiore said. Price increases have moderated to levels not seen since June 2017.
The following 11 manufacturing industries reported growth in December: textile mills; apparel, leather and allied products; machinery; transportation equipment; computer and electronic products; wood products; chemical products; food, beverage and tobacco products; miscellaneous manufacturing; electrical equipment, appliances and components; and primary metals. The following six industries contracted in December: printing and related support activities; fabricated metal products; nonmetallic mineral products; petroleum and coal products; paper products; and plastics and rubber products.