ISM Manufacturing PMI — December 2024
Headline: The Manufacturing PMI rose 0.9 point to 49.3, but manufacturing remained in contraction for the ninth consecutive month. December was a six-month high, above the prior six-month range of 46.5–48.5 and its 47.4 average, though still below the 50.0 manufacturing breakeven. The reading remains consistent with a growing overall economy, as it is above the economy-wide breakeven of 42.5.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo |
|---|---|---|---|---|---|
| New Orders | 52.5 | 50.4 | 2.1 | Growing | 6-mo high |
| Production | 50.3 | 46.8 | 3.5 | Growing | 6-mo high |
| Employment | 45.3 | 48.1 | -2.8 | Contracting | below avg (45.9) |
| Supplier Deliveries | 50.1 | 48.7 | 1.4 | Slowing | below avg (51.0) |
| Inventories | 48.4 | 48.1 | 0.3 | Contracting | above avg (45.8) |
| Customers' Inventories | 46.7 | 48.4 | -1.7 | Too Low | below avg (47.8) |
| Prices | 52.5 | 50.3 | 2.2 | Increasing | above avg (52.1) |
| Backlog of Orders | 45.9 | 41.8 | 4.1 | Contracting | 6-mo high |
| New Export Orders | 50 | 48.7 | 1.3 | Unchanged | 6-mo high |
| Imports | 49.7 | 47.6 | 2.1 | Contracting | 6-mo high |
Key moves:
- New Orders reached a six-month high at 52.5, while Production also reached a six-month high and crossed back above 50.
- Backlogs improved 4.1 points to 45.9, a six-month high, but remained in contraction for the 27th month.
- Employment fell to 45.3, below its six-month average, while New Export Orders reached 50.0, moving from contraction to unchanged.
Insights:
- The demand mix improved materially: New Orders at 52.5 versus Inventories at 48.4 indicates orders are outpacing manufacturers’ inventory positions. The inventory increase therefore looks more consistent with preparation for firmer demand than an involuntary buildup.
- Customers’ Inventories at 46.7, or “too low,” is a constructive forward signal: lean channel inventories should support replenishment and future production. This is reinforced by New Orders at a six-month high.
- The headline still contracts despite the monthly improvement, underscoring the divergence between momentum and level. Production crossed into growth, but the persistent contraction in Backlogs at 45.9 and the seven-month employment contraction suggest excess capacity has not been fully absorbed.
- Supplier Deliveries at 50.1 indicate slower deliveries, generally consistent with firmer demand or some supply tightness, although the reading is below its six-month average of 51.0.
- Prices rose to 52.5, above both 50 and the six-month average of 52.1, pointing to renewed input-cost pressure and a less favorable margin/inflation backdrop.
Breadth & prices: Seven industries reported growth and none reported contraction. Input prices were increasing, with the Prices Index rising to 52.5.
Takeaway: December’s six-month-high PMI, stronger New Orders, and return of Production to expansion point to an emerging stabilization in the manufacturing cycle. However, continued job shedding and a 27-month backlog contraction argue for a tentative recovery rather than a confirmed manufacturing upswing.