Manufacturing contracts for the ninth consecutive month: Manufacturing activity continued to show some signs of improvement in December, with the ISM Manufacturing® PMI rising to 49.3%. While inventories, employment and backlog of orders remained in contraction, production returned to expansion after six months of contraction.
Why it matters: The ISM Index for manufacturing activity has been essentially in contraction for the past two years as demand for goods slowed post-pandemic and was followed by uncertainty around recession risks and election outcomes.
Texas manufacturing activity increases in December: The production index rose from -0.9 to 3.9 but was still far below the last positive reading of 14.6 in October. The new orders index increased to -0.9, indicating demand was relatively unchanged from November. Meanwhile, the capacity utilization and shipments indexes both rose slightly but remained in negative territory.
What it means: While manufacturers remained optimistic about the next six months, demand is unchanged, and increased production appears to just be declining the backlog of orders.
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