A report released by the Institute for Supply Management on Monday showed its reading on U.S. manufacturing activity unexpectedly decreased in the month of December.
The ISM said its manufacturing PMI edged down to 47.9 in December after slipping to 48.2 in November, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 48.3.
With the unexpected dip, the manufacturing PMI dropped to its lowest reading of 2025.
The slight decrease by the headline index partly reflected a notable decline by the inventories index, which slumped to 45.2 in December from 48.9 in November.
The production index also slipped to 51.0 in December from 51.4 in November, although the reading above 50 still indicates growth.
“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.
Meanwhile, the ISM said the new orders index crept up to 47.7 in December from 47.4 in November, while the employment index rose to 44.9 in December from 44.0 in November.
The report also said the prices index came in at 58.5 in December, unchanged from November, indicating raw materials prices increased for the 15th straight month.
On Wednesday, the ISM is scheduled to release a separate report on service sector activity in the month of December.
The services PMI is expected to dip to 52.3 in December from 52.6 in November, but a reading above 50 would still indicate growth.
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