Haver Resources
Jan 03

U.S. ISM Manufacturing Index Improves in December and in 2024

Summary
  • Index reaches nine-month high.
  • New orders & production improve; employment weakens.
  • Prices reading gains slightly.

The ISM Purchasing Managers Index of activity in the manufacturing sector rose to 49.3 during December from 48.4 in November. Despite the rise, the index remained below the break-even level of 50.3 reached in March. It reached a low of 46.5 in July. A level of 48.2 had been expected by the Action Economics Forecast Survey. During all of 2024, the index averaged 48.3 versus 47.1 in 2023. These readings are below the 53.5 averaged in 2022. It hit a monthly high of 64.0 in March 2021.

Performance of the component indexes was mixed last month. The new orders index jumped to 52.5 from 50.4, and was the highest level since January. A steady 21.0% (NSA) of respondents reported higher orders while a lessened 24.1% indicated a decline. The production index increased to 50.3, an eight month high, after rising to 46.8 in November. A fairly steady 15.3% (NSA) of respondents reported higher production while 25.4% reported lower. The supplier delivery index rose to 50.1 from 48.7, after hitting a high of 52.6 in July. The inventories reading improved to 48.4, a four-month high, from 48.1 in November. Both readings were below a high of 50.3 in August.

Working lower last month, the employment reading fell to 45.3, a three-month low, after rising to 48.1 in November. It remained down from a high of 51.1 in May. A greatly lessened seven percent (NSA) of respondents reported higher employment while 17.7% reported lower. For all of 2024, the index averaged 46.7 versus 48.4 in 2023.

The prices index, which is not part of the composite series, rose to 52.5 (NSA) in December after falling to 50.3 in November from 54.8 in the prior month. An increased 14.4% of respondents reported higher prices last month while a lessened 9.5% reported lower prices. The latest level remained below a 60.9 high in April. For the year, however, the prices index improved to an average 53.7 from 46.6 in 2024.

In other series, the export orders index rose to 50.0, a seven-month high, from 48.7 in November. For the year, the index was steady at 48.6. The imports index rose to 49.7, the highest level since May, while the order backlog index surged to 45.9, a nine-month high.

The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver’s AS1REPNA database.

About The Author

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Thomas J. Moeller

Haver Analytics is pleased to bring Thomas J. Moeller’s commentaries on the state of the U.S. economy to its clients.

Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters’ Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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