December 2023 Manufacturing ISM Report On Business Reports Manufacturing Continues to Contract

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected. Economic activity in the manufacturing sector contracted in December for the 14th consecutive month following a 28-month period of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The U.S. manufacturing sector contracted in December, as the Manufacturing PMI registered 47.4 percent in December, up 0.7 percentage point compared to November’s reading of 46.7 percent. This is the 14th month of contraction.

ISM’s New Orders Index contracted for the 16th consecutive month in December, registering 47.1 percent, a decrease of 1.2 percentage points compared to November’s reading of 48.3 percent.

The Production Index moved back into expansion territory in December, registering 50.3 percent, 1.8 percentage points higher than the November reading of 48.5 percent.

ISM’s Employment Index registered 48.1 percent in December, 2.3 percentage points higher than the November reading of 45.8 percent. The index indicated employment contracted again in December (but at a slower rate) after one month of expansion and three months of contraction before that.

Delivery performance of suppliers to manufacturing organizations was faster for the 15th straight month in December, as the Supplier Deliveries Index registered 47 percent, 0.8 percentage point higher than the 46.2 percent reported in November.

The Inventories Index registered 44.3 percent in December, 0.5 percentage point lower than the 44.8 percent reported in November. Manufacturing inventories contracted at a slightly faster rate compared to the previous month.

ISM’s Backlog of Orders Index registered 45.3 percent, a 6-percentage point gain compared to November’s reading of 39.3 percent, indicating order backlogs contracted for the 15th consecutive month (at a notably slower rate in December) after a 27-month period of expansion.

The only manufacturing industry to report growth in December is Primary Metals. The 16 industries reporting contraction in December — in the following order — are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Plastics & Rubber Products; Machinery; Nonmetallic Mineral Products; Textile Mills; Petroleum & Coal Products; Paper Products; Wood Products; Fabricated Metal Products; Computer & Electronic Products; Miscellaneous Manufacturing; Furniture & Related Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Chemical Products.