ISM: U.S. Manufacturing PMI Drops to 47.9 in Dec


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- A key U.S. purchasing managers index released on Monday 
(1/5) showed a reading that dropped from last month and remained below a core 
marker that separated expansion from contraction -- the tenth straight month 
for such a trend.

   The Manufacturing Purchasing Managers Index of the Institute for Supply 
Management stood at 47.9 in December, down from 48.2 recorded in November. It 
was the fourth monthly drop in a row and marked the tenth consecutive month 
that the reading was below the 50-point mark that separates the positive and 
negative constituencies for the index.

   This is not the first extended period of contraction in U.S. manufacturing 
PMI. Prior to a two-month expansion between January and February this year, the 
index saw 26 straight months of weakness.

   The latest decline in U.S. manufacturing activity was attributed in part to 
pullbacks in new orders and employment. The New Orders Index remained in 
contraction territory for the fourth month in a row.

   "In December, U.S. manufacturing activity contracted at a faster rate, with 
pullbacks in the Production and Inventories indexes leading to the 
0.3-percentage point decrease of the Manufacturing PMI. Those two subindexes 
increased in November, so their contraction this month continues the short-term 
"bubble" of improvement indicative in the last several months of PMI data -- 
and a hallmark of recent economic uncertainty in manufacturing," said Susan 
Spence, chair of the ISM Manufacturing Business Survey Committee.

   Two manufacturing industries reported growth in December. Petroleum and coal 
products were among the fifteen manufacturing industries surveyed reporting 
contraction.

   In December, the production index fell by 0.4 points to 51, while the 
backlog of orders index rose by 1.8 points to 45.8 in November.

   The contraction in new export orders slowed, with the associated index 
rising by 0.6 points to 46.8 in December.

   The customers' inventories index remained in "too low" territory, dropping 
by 1.4 points to 43.3, according to the report.

   The contraction in employment slowed, with the index rising by 0.9 
percentage points to 44.9.

   December's prices index was unchanged from last month.

   Following the release of the data, crude oil futures softened but remained 
up on the day, with the front-month NYMEX West Texas Intermediate futures 
contract up by $0.72 to $57.73 bbl. The U.S. dollar index dropped by 0.08 
points to 98.295 but remained up by 0.137 points on the day against a basket of 
foreign currencies.

    




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