US manufacturing PMI revised up, but downturn continues
By Benjamin Chiou
Date: Thursday 02 Jan 2025
(Sharecast News) - The decline in American manufacturing activity picked up pace in December, though it wasn't as severe as initially feared, according to revised estimates from S&P Global on Thursday.
The US manufacturing purchasing managers' index slipped to 49.4 last month, down from 49.7 in November but up from the flash reading of 48.3 published two weeks ago.
While this was a better than economists' predictions for no change form the initial estimate, this was still the sixth straight month below the key 50-point level which separates growth from contraction.
According to S&P Global, manufacturing output fell at its fastest pace in 18 months, while input cost inflation accelerated significantly. Business confidence across the sector also worsened after having jumped in November.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said that December saw "disappointing" inflows of new orders.
"While November had seen a near-stabilisation of order books as uncertainty surrounding the election passed, reviving customer demand, this respite has proved temporary. Factories are reporting an environment of subdued sales and inquiries, notably in terms of exports," he said.
On a positive note, employment increased modestly for the second straight month, with firms mostly expecting business to pick up early into the new year. Williamson said that manufacturers were "pinning hopes on expectations that the new administration will loosen regulations, reduce tax burdens and boost demand for US-made goods via tariffs".
However, confidence has fallen since the election on concerns about higher input prices and the possibility that interest rates will not be cut as much as previously hoped.
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