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US DATA: Solid Dec ISM Manufacturing Survey Points To Slowly Improving Activity

US DATA
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The December manufacturing ISM survey beat expectations, but still pointed to soft if improving sectoral dynamics.

  • The headline reading of 49.3 was an improvement from 48.4 prior and a 9-month high, besting the survey expectation of 48.4.
  • The sub-50 reading still indicates a contracting manufacturing industry in December, in line with the S&P Global PMI, MNI Chicago PMI, and various regional Fed indices, but activity appears to have improved since a summer bottom. A boom does not appear to be in the offing, though the potential front-loading of production to dampen the impact of tariffs and other policy changes is a dynamic worth watching in the coming months.
  • The internals of the survey looked solid as well for the most part, with several categories printing multi-month highs.
  • In the most encouraging sign of improving momentum, New Orders picked up for the 4th consecutive month to 52.5 (from 50.4 prior), equaling the best reading of the year seen in January, with New Orders minus Inventories ticking a little higher. Production rose strongly, to 50.3 (from 46.8 prior), an 8-month high.
  • Intriguingly given tariff (and retaliatory tariff) uncertainty going into 2025, export orders rose for the 3rd consecutive month (1.3 points to 50.0, a 7-month high). And the ISM noted in the report regarding inventories that "This month’s index reading indicating a slowing rate of contraction suggests that companies are willing to invest more for the future, to (1) better perform to their customers’ delivery demands or (2) advance material deliveries to avoid potential tariffs, or a combination of both."
  • On the more concerning side: prices paid rise more than expected to 52.5 (50.3 prior, 51.8 survey), a 4-month high. That's still well below the supply chain/pandemic reopening levels above 80.0, but offers another suggestion that goods price inflation is at or near a bottom.
  • And the employment index index fell 2.8 points to 45.3, the largest pullback since July (reversing November's outsized 3.7 point jump), which may be taken into account for estimates for the December nonfarm payrolls report.
ISMmanufacturingDec2024
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The December manufacturing ISM survey beat expectations, but still pointed to soft if improving sectoral dynamics.

  • The headline reading of 49.3 was an improvement from 48.4 prior and a 9-month high, besting the survey expectation of 48.4.
  • The sub-50 reading still indicates a contracting manufacturing industry in December, in line with the S&P Global PMI, MNI Chicago PMI, and various regional Fed indices, but activity appears to have improved since a summer bottom. A boom does not appear to be in the offing, though the potential front-loading of production to dampen the impact of tariffs and other policy changes is a dynamic worth watching in the coming months.
  • The internals of the survey looked solid as well for the most part, with several categories printing multi-month highs.
  • In the most encouraging sign of improving momentum, New Orders picked up for the 4th consecutive month to 52.5 (from 50.4 prior), equaling the best reading of the year seen in January, with New Orders minus Inventories ticking a little higher. Production rose strongly, to 50.3 (from 46.8 prior), an 8-month high.
  • Intriguingly given tariff (and retaliatory tariff) uncertainty going into 2025, export orders rose for the 3rd consecutive month (1.3 points to 50.0, a 7-month high). And the ISM noted in the report regarding inventories that "This month’s index reading indicating a slowing rate of contraction suggests that companies are willing to invest more for the future, to (1) better perform to their customers’ delivery demands or (2) advance material deliveries to avoid potential tariffs, or a combination of both."
  • On the more concerning side: prices paid rise more than expected to 52.5 (50.3 prior, 51.8 survey), a 4-month high. That's still well below the supply chain/pandemic reopening levels above 80.0, but offers another suggestion that goods price inflation is at or near a bottom.
  • And the employment index index fell 2.8 points to 45.3, the largest pullback since July (reversing November's outsized 3.7 point jump), which may be taken into account for estimates for the December nonfarm payrolls report.
ISMmanufacturingDec2024