While the ISM has tried to put a positive spin on the manufacturing economy throughout 2015, the slide in USA industrial production (the output of businesses integrated in the industrial sector of the economy such as manufacturing, mining and utilities) has been quite evident, going from 4.6 in January 2015 to -1.2 in November (the last month for which data is available from www.tradingeconomics.com; see chart below). While a reading below 50 indicates a contraction in manufacturing, the index remains above 43.1, which is associated with a recession. The New Export Orders Index registered 51 percent, up 3.5 percentage points from the November reading of 47.5 percent and the Imports Index registered 45.5 percent, down 3.5 percentage points from the November reading of 49 percent.
Advertisement
Factories, hobbled by sluggish global growth, cut staff at the end of 2015.
Manufacturing activity contracted in December for the second straight month, according to the Institute of Supply Management’s (ISM) Manufacturing Report on Business. The employment gauge, meanwhile, dropped 3.2 points to 48.1% in December.
Economists expect the greenback and crude prices to stabilize, sparking modest growth for manufacturers overall. Prices for U.S. Treasury debt prices rose, while the dollar trimmed gains versus a basket of currencies.
Factories globally ended the year on a weak note, contributing to a selloff in stocks worldwide on Monday.
Manufacturing ISM(R) Report On Business(R) data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.
“There has been a record-low backlog of orders”.
The section of the index that tracks employment trends was 51.76, compared with 48.16 in November. The 11 industries reporting a decrease in new orders during December – listed in order – are: Wood Products; Apparel, Leather & Allied Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; Nonmetallic Mineral Products; Furniture & Related Products; Computer & Electronic Products; Machinery; and Food, Beverage & Tobacco Products.
India’s manufacturing sector is also slowing down.
Comments submitted to the report by ISM member respondents were mixed depending on industry.
The drop is the biggest since June 2014.
Advertisement
Further losses in oil prices last month led to more cutbacks in hydrocarbon exploration activities, resulting in increased layoffs. Unemployment held at a more than seven-year low of 5 percent in November.
