US Manufacturing PMI Hits Nine-Month High in December
In December, the US manufacturing sector showed signs of recovery with a PMI rise, despite ongoing challenges from input costs and tariffs
Washington, US, Manufacturing, PMI, Economy, Donald Trump
Washington: So, it looks like the US manufacturing sector is finally bouncing back a bit. In December, the manufacturing PMI jumped to 49.3, which is the best it’s been since March. That’s up from 48.4 in November, so it’s a nice little boost.
Now, just to clarify, a PMI below 50 means things are contracting, and this is the ninth month in a row that it’s been under that mark. But hey, it’s a step in the right direction! Economists were actually expecting it to stay the same, so this is a pleasant surprise.
Manufacturing has had a rough time lately, mainly because of the Federal Reserve’s interest rate hikes to tackle inflation. But some surveys suggest that the decline in factory production might not be as bad as it seems.
Interestingly, government data showed that manufacturing grew at a 3.2% annual rate in the third quarter, which helped the economy expand by 3.1% during that time. So, there’s some good news mixed in there.
On the interest rate front, the Fed has been cutting rates, bringing them down to between 4.25% and 4.50%. This is the third cut in a row since they started easing things up back in September.
Looking ahead, President-elect Donald Trump’s plans to cut taxes could give manufacturing a nice little nudge. But there are also concerns about his promise to raise tariffs on imports, which could drive up raw material prices.
The Fed is now projecting two rate cuts this year, which is fewer than they initially thought. They’re keeping an eye on how resilient the economy is and how Trump’s policies might play out.
In the ISM survey, the new orders sub-index rose to 52.5, marking the first expansion since March. That’s a good sign! Factory production is also picking up after a rough patch.
However, prices paid by manufacturers went up, and imports are on the rise too. It seems like manufacturers might be stocking up on foreign goods before those tariffs kick in.
Lastly, the gauge for supplier deliveries went up slightly, but factory employment is still struggling, with job indexes dropping. It’s a mixed bag, but there’s definitely some hope for the manufacturing sector!