US manufacturing sector eyes recovery in December; ISM PMI increased to 47.4
economictimes.indiatimes.comimprovement in factory employment.
The Institute for Supply Management (ISM) said on Wednesday that its manufacturing PMI increased to 47.4 last month after being unchanged at 46.7 for two straight months. It was the 14th consecutive month that the PMI stayed below 50, which indicates contraction in manufacturing. That is the longest such stretch since the period from August 2000 to January 2002.
Economists polled by Reuters had forecast the index rising to 47.1. According to the ISM, a PMI reading below 48.7 over a period of time generally indicates a contraction of the overall economy. The ISM and other factory surveys, however, likely overstate the weakness in manufacturing.
The so-called hard data suggest that manufacturing, which accounts for 10.3% of the economy, is plodding along. Orders for long-lasting manufactured goods were up strongly on a year-on-year basis in November. Though factory production has been weak, the magnitude of the drop has gotten smaller in recent months.
The economy continues to expand, growing at a 4.9% annualized rate in the third quarter. Growth estimates for the October-December quarter are currently as high as a 2.0% pace.
The ISM survey's forward-looking new orders sub-index fell to 47.1 last month from 48.3 in November.
Production at factories rebounded, with the sub-index coming in at 50.3 from 48.5 in November. Production could improve further as a measure of customers' inventories fell back below the 50 level after rising in November to what the ISM said was the upper end of «just right.»
Several manufacturers in November cited the need to reduce inventory levels.
Subdued demand helped to further depress prices at
