Manufacturing contracted in December as the purchasing managers’ index registered 32.4%, 3.8 percentage points lower than the 36.2% reported in November.
This is the lowest reading since June 1980 when the PMI registered 30.3%. A reading above 50% indicates that the manufacturing economy is generally expanding, while below 50% indicates that it is generally contracting.
Economic activity in the manufacturing sector failed to grow in December for the fifth consecutive month, and the overall economy contracted for the third consecutive month, the nation’s supply executives said in the latest manufacturing Institute for Supply Management Report on Business.
“Manufacturing activity continued to decline at a rapid rate during the month of December,” the report said. “The decline covers the full breadth of manufacturing industries, as none of the industries in the sector report growth at this time. New orders have contracted for 13 consecutive months, and are at the lowest level on record going back to January 1948. Order backlogs have fallen to the lowest level since ISM began tracking the backlog of orders index in January 1993. Manufacturers are reducing inventories and shutting down capacity to offset the slower rate of activity.”