The manufacturing sector continued to contract in December, a closely watched economic indicator released Wednesday by the Institute for Supply Management showed.
The ISM Purchasing Managers Index (PMI) rose to 47.4% in December, slightly higher than analysts' expectations of 47.2%. Last month's PMI was 46.7.
Despite the better-than-expected improvement, this figure remains below the 50 percent mark that separates expansion from contraction in the sector. Levels above 48.7 tend to indicate economic expansion as a whole.
New orders fell by 1.2% in December. Although customer inventories have returned to negative territory, this can be seen as a promising development for future demand.
New orders decreased by 1.2 points to 47.1. The price paid gauge fell to a level just below the three-month average. Prices are expected to rise 4.1% in 2023 and 3.1% this year, according to ISM's Timothy Fiore.
Of the 17 industry sectors tracked by ISM, only primary metals expanded in December.
The survey reflects responses before the Fed's December meeting and a significant change in the earlier and more frequent rate cuts next year.
“Expectations that the U.S. Federal Reserve will postpone interest rate changes will encourage more companies to spend on capital expenditures again. Approval of the budget after the start of the calendar year will encourage investment and increase manufacturing Activity should increase again,” said a computer and electronic products respondent.
