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ISM Report Shows US Manufacturing Diving Deeper in Contraction in December

Posted Friday, January 3, 2020 by
Skerdian Meta • 2 min read

The US ISM manufacturing report was released a while ago and it was yet another really weak one. It was this report which turned the USD bearish in September and again at the beginning of last month. Today’s report was expected to show an improvement for December, but it was another disappointing one. Below are the figures of this report and the commentary from the ISM:

US December ISM manufacturing 47.2 points vs 49.0 expected
Lowest since June 2009
Prior was 48.1
New orders 46.8 vs 47.2 prior — lowest since April 2009
Prices paid 51.7 vs 47.8 expected
Prior prices paid 46.7
Employment 45.1 vs 46.6 prior
Full report

The headlines speak for themselves. This is a very weak reading and puts a dent in the idea that rate cuts are going to spur a reversal in manufacturing. The US-China trade truce wouldn’t quite be fully captured by this month’s data but you have to hope it can turn it around.

Comments in the report:

“Backlog of orders is shrinking due to new order pace continuing to fall.” (Computer & Electronic Products)
“Due to sluggish sales, we have introduced promotions to generate increased sales.” (Chemical Products)
“Cautiously optimistic is the rule these days. Sales are decent, but we’re wondering what 2020 will bring. Still hedging that it will be successful – but maybe not as much as this year.” (Transportation Equipment)
“Starting to see suppliers try to pass on costs associated with tariffs. Uncertainty on the trade front continues to keep agricultural markets on the defensive.” (Food, Beverage & Tobacco Products)
“Down month-to-month, but up over last year.” (Miscellaneous Manufacturing)
“Anticipated large export orders did not materialize. As a result, expected U.S. production has decreased.” (Fabricated Metal Products)
“Dealer inventories have rebounded, and overall customer market has softened, resulting in corrections to near-term production schedules and a tentative forecast outlook.” (Machinery)
“Export markets continue to weaken for plastic resins – Mexican producers are actually trying to sell product back into the U.S. due to weak in-country demand.” (Plastics & Rubber Products)
“Our outlook for the first quarter of 2020 is positive. We have secured contracts from a number of former customers and expect sales growth of about 5 percent over Q4 of 2019.” (Textile Mills)
“The construction market seems to have slowed for end of year. Overall, it’s marginally up.” (Nonmetallic Mineral Products)