US DATA
The final December S&P Global US manufacturing PMI reading showed less of a deterioration than implied by the flash estimate, coming in at 49.4 (49.7 prior, 48.3 prelim). Instead of a 3-month low, this marks a 2-month low, but still the 6th consecutive monthly reading below 50.0.
- Employment was the only real bright spot. From the report: "After having neared stabilization in the previous month, December saw a sharper reduction in new orders. The rate of decline in production also quickened, while firms scaled back purchasing activity and inventory holdings. Business confidence also waned, after having jumped higher in November. On a more positive note, employment increased modestly for a second month running. Manufacturers were faced with a much sharper rise in input costs, prompting them to increase their selling prices again."
- Friday brings the ISM manufacturing print which is expected to see a similar weakening at end-year (survey: 48.2, from 48.4 Nov). December's regional Fed surveys have been mixed, suggesting continued manufacturing softness at year-end despite some indications of optimism immediately after the November elections.
- The overall theme of the manufacturing sector remaining steady at a weak level remains intact. Also likely to be confirmed intact in Monday's final PMI prints is the divergence with the relatively buoyant services sector (58.5 in the PMI flash December print, though that's more optimistic than the ISM equivalent).
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