December 2019 Manufacturing ISM Report On Business Reports Manufacturing Continues Contraction at Faster Rate

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector contracted in December, and the overall economy grew for the 128th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing contracted in December, as the PMI registered 47.2 percent, a decrease of 0.9 percentage point from the November reading of 48.1 percent.  The PMI contracted for the fifth straight month, at faster levels compared to November.  This marks nine straight months of softening or contraction in manufacturing.  The sector's rate of contraction is the fastest since June 2009, when the PMI registered 46.3 percent.

ISM's New Orders Index registered 46.8 percent in December, a decrease of 0.4 percentage point when compared to the 47.2 percent reported for November.  This indicates that new orders contracted for the fifth straight month, and at a faster rate.

ISM's Production Index registered 43.2 percent in December, which is 5.9 percentage points lower than the 49.1 percent reported for November, indicating a fifth consecutive month of contraction.

ISM's Employment Index registered 45.1 percent in December, a decrease of 1.5 percentage points compared to the November reading of 46.6 percent.  This is the fifth month of employment contraction, at a faster rate in December.

The delivery performance of suppliers to manufacturing organizations was slower in December, as the Supplier Deliveries Index registered 54.6 percent.  This is 2.6 percentage points higher than the 52 percent reported for November as supplier deliveries continue to become more difficult.

The Inventories Index registered 46.5 percent in December, an increase of 1 percentage point from the 45.5 percent reported for November.  The index contracted for the seventh straight month, albeit at a slower rate.

ISM's Backlog of Orders Index registered 43.3 percent in December, which is 0.3 percentage point higher than the 43 percent reported in November, indicating order backlogs contracted for the eighth consecutive month, at a slower rate in December.

Of the 18 manufacturing industries, three reported growth in December: Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Computer & Electronic Products.  The 15 industries reporting contraction in December — listed in order — are: Apparel, Leather & Allied Products; Wood Products; Printing & Related Support Activities; Furniture & Related Products; Transportation Equipment; Nonmetallic Mineral Products; Paper Products; Fabricated Metal Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Textile Mills; Primary Metals; Chemical Products; Plastics & Rubber Products; and Machinery.