U.S. manufacturing activity slows; factory supply constraints easing

U.S. manufacturing activity slows; factory supply constraints easing - IHS Markit survey

WASHINGTON (Reuters) – U.S. manufacturing activity slowed to a one-year low in December, but there are signs that labor and raw material supply constraints at factories are starting to ease.

Data firm IHS Markit said on Thursday that its flash manufacturing PMI fell to a reading of 57.8 in mid-December from 58.3 in November. That was the lowest since December 2020. A reading above 50 indicates expansion in the manufacturing sector, which accounts for 12% of the economy. Economists had forecast the flash PMI climbing to 58.5.

Manufacturing remains underpinned by strong demand for goods and extremely lean inventories at businesses. But strained supply chains because of the COVID-19 pandemic are a constrain.

There are glimmers of hope, however. The survey showed “supply chain delays moderating markedly during the month,” and “the rate of job creation quickened to the fastest since June.” It also noted that “the rate of cost inflation softened to the slowest for seven months.”

But shortages remained binding for the vast services sector. The survey’s flash services sector PMI dipped to a reading of 57.5 from 58.0 in November. Economists polled by Reuters had forecast a reading of 58.5 for the services sector, which accounts for more than two-thirds of U.S. economic activity.

A measure of services sector input prices rose to 77.4, the highest since the series started in 2009, from 75.7 in November. That is a potential sign that inflation could remain significantly high for a while. Consumer prices increased by the most since 1982 on a year-on-year basis in November.

With both manufacturing and services sectors activity slowing, overall business activity cooled this month. The survey’s flash Composite PMI Output Index fell to a reading of 56.9 from 57.2 in November.

Its measure of prices paid by businesses for inputs climbed to 78.1. That was the highest reading since the series started in 2009 and followed 77.6 in November.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave a Reply

Your email address will not be published.