ISM Manufacturing: Lowest Level Since June 2009

The ISM Manufacturing Index FELL by 0.4 points in December to 48.2%, compared with market expectations for a small increase to a 49.0%. Moreover, this was its lowest reading since June 2009 and the 2nd consecutive contractionary reading. New Orders increased from 48.9% to 49.2%. Meanwhile, Export Orders grew slightly and expanded for the first time in 7 months. Production also increased from 49.2% to 49.8%. Consequently, Order Backlogs contracted for the 7th consecutive month. Inventories grew from 43.0% to 43.5% but are still moderately below the average survey level for the last twelve months. Employment declined moderately from 51.3% to 48.1%. Prices declined moderately. Bottom Line: Manufacturing activity contracted in December for the 2nd consecutive month, to its lowest level since June 2009. The differential between new orders and inventory levels was little changed, suggesting manufacturing activity levels will likely improve over the coming months. Employment in the manufacturing sector fell and was modestly below the average survey level for the last twelve months. Overall the report suggests weak manufacturing activity.