US Manufacturing PMI Slips to 15-month Low in December
January 3, 2019 | Business WireEstimated reading time: 6 minutes
December data indicated a slower, albeit still solid, improvement in the health of the U.S. manufacturing sector. The headline PMI dipped to a 15-month low amid a weaker rise in new business and the joint-softest expansion in output since September 2017. At the same time, the pace of job creation eased to an 18-month low, despite a further rise in backlogs. Notably, business confidence among manufacturers fell again in December, with the degree of optimism dipping to the lowest since October 2016. Meanwhile, inflationary pressures eased at the end of 2018.
The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 53.8 in December, down from 55.3 in November. The latest headline figure suggested a weaker, but still strong, improvement in operating conditions across the goods producing sector. Although ending the year with a softer overall expansion, the final quarterly average of 2018 was strong and quicker than that seen in 2017.
Production growth remained solid in December, and at a rate that matched that seen in November. The rise in output was attributed to greater new order volumes. That said, the upturn was nonetheless the joint-weakest in 15 months.
Following a slight pick up in November, new order growth eased in December. Though strong, the pace of expansion was the weakest since September 2017. Although some firms stated that the upturn was driven by new order inflows from newly acquired clients, others cited concerns surrounding a drop in client demand compared to earlier in the year.
Conversely, new export business grew at an accelerated pace in December. New orders from abroad increased for the fifth successive month and at the fastest rate since January amid stronger foreign client demand.
That said, a weaker overall rise in new orders led to a drop in business confidence among manufacturing firms in December. The degree of optimism was strong, but well below the long-run series average. Positive sentiment was dampened by concerns surrounding the longevity of new business growth. Moreover, future output expectations were at their lowest since October 2016.
Despite a moderate rise in backlogs in December, the rate of job creation softened to an 18-month low. Although firms noted an increase in workforce numbers following greater production requirements, others suggested that low rates of employee retention had weighed on growth.
Meanwhile, rates of both input price and output charge inflation eased in December. Greater cost burdens were reportedly due to raw material stockpiling among manufacturers, shortages of electronics components and the ongoing impact of tariffs. That said, the rate of inflation dipped to an 11-month low. Factory gate prices meanwhile rose at the weakest rate in 2018.
Commenting on the PMI data, Chris Williamson, chief business economist at IHS Markit, said:
"Manufacturers reported a weakened pace of expansion at the end of 2018, and grew less upbeat about prospects for 2019. Output and orders books grew at the slowest rates for over a year and optimism about the outlook slumped to its gloomiest for over two years. The month rounds of a fourth quarter in which manufacturing production is indicated to have risen at only a modest annualised rate of about 1%.
“Some of the weakness is due to capacity constraints, with producers again reporting widespread difficulties in finding suitable staff and sourcing sufficient quantities of inputs. However, the survey also revealed signs of slower demand growth from customers, as well as rising concerns over the impact of tariffs. Just over two thirds of manufacturers reporting higher costs attributed the rise in prices to tariffs.
“Growth was led by strengthening demand for consumer goods, and robust growth was also reported for investment goods such as plant and machinery. But producers of intermediate goods—who supply inputs to other manufacturers—reported the weakest rise in new orders for over two years, hinting at increased destocking by their customers.
“A shift to inventory reduction was highlighted by purchasing activity in the manufacturing sector rising at the weakest rate for one and a half years in December, providing further evidence that companies have become increasingly cautious about spending amid rising uncertainty about the outlook.”
Page 1 of 2
Suggested Items
Arrow Electronics Earns Dual Honors as Dell Technologies Partner of the Year
05/29/2025 | BUSINESS WIREGlobal technology solutions provider Arrow Electronics has received two prestigious awards from Dell Technologies: 2025 OEM Solutions Partner of the Year and 2025 North America Distributor of the Year. The awards were announced at Dell Technologies World, held in Las Vegas in late May.
Standard of Excellence: The Role of Technology in Enhancing the Customer Experience
05/28/2025 | Anaya Vardya -- Column: Standard of ExcellenceMaya Angelou said, “People will not remember what you said, but they will remember how you made them feel.” This makes me think about the importance of delivering an exceptional customer experience. Businesses that embrace technology to streamline interactions, personalize services, and create seamless engagements set new benchmarks in customer satisfaction. Integrating advanced technologies into customer service improves efficiency, enhances engagement, fosters loyalty, and drives business success.
Robert C. Donovan Joins DISTRON, Marking the Third Generation in Family Leadership
05/26/2025 | Distron Corp.DISTRON CORPORATION, a leading U.S.-based electronics contract manufacturer, proudly announces that Robert C. Donovan, son of CEO Robert H. Donovan and grandson of Founder Robert G. Donovan, has joined the company as a Management Trainee. This milestone marks the beginning of the third generation of family leadership at the company.
It’s Only Common Sense: Price—Is That All You’ve Got?
05/26/2025 | Dan Beaulieu -- Column: It's Only Common SenseAll I hear about is price, and I have to ask: Is that all you have? Do you think there’s no difference between what you and your competitor do, except for price? I understand it’s tempting to focus on price as a primary selling point, but it’s not the most important thing customers care about. Selling on price alone is unsustainable and can undermine your brand and profitability in the long run. The key to long-term success is in selling value.
Geospace Unveils New Brand Identity Reflecting the Company’s Move into Diverse Markets
05/20/2025 | BUSINESS WIREGeospace Technologies Corporation announces a new brand identity, reflecting the company's transformation of its leadership and culture along with a redefined strategy focused on applied intelligent technology.