The December 2019 Manufacturing ISM® Report On Business® paints another grim picture of the state of US manufacturing.

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ISM Key Details

  • The December PMI® registered 47.2 percent, a decrease of 0.9 percentage point from the November reading of 48.1 percent. This is the PMI®'s lowest reading since June 2009, when it registered 46.3 percent. The PMI is down for the fifth month and at a faster rate.
  • The New Orders Index registered 46.8 percent, a decrease of 0.4 percentage point from the November reading of 47.2 percent. New Orders are down for the fifth month and at a faster rate.
  • The Production Index registered 43.2 percent, down 5.9 percentage points compared to the November reading of 49.1 percent. Production is down for the fifth month and at a faster rate.
  • The Backlog of Orders Index registered 43.3 percent, up 0.3 percentage point compared to the November reading of 43 percent. The order backlog is down for the eighth month.
  • The Employment Index registered 45.1 percent, a 1.5-percentage point decrease from the November reading of 46.6 percent. Employment is down for the fifth month and at a faster rate.

15 of 18 Industries in Contraction

  • Three Gaining: Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Computer & Electronic Products.
  • Fifteen Contracting: Apparel, Leather & Allied Products; Wood Products; Printing & Related Support Activities; Furniture & Related Products; Transportation Equipment; Nonmetallic Mineral Products; Paper Products; Fabricated Metal Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Textile Mills; Primary Metals; Chemical Products; Plastics & Rubber Products; and Machinery.

Consensus Outlook

The Econoday consensus expected a bounce from 48.1 to a slower contraction at 49.1.

Instead, things worsened despite the End of the GM Strike in October.

On December 17, I commented Industrial Production Rebounds after GM Strike Ends.

Manufacturing production is still 2.3% below the peak level reached in December of 2007. (Index levels 108.59 vs 106.09). This production and the associated jobs simply are not coming back.

Looking Ahead

The current rebound is artificial, but so is the strike that preceded it. Looking ahead, Boeing is going to have a significant impact in the first quarter.

Thousands of jobs and possibly as much as 1/3 of a point of GDP as Boeing Will Suspend 737 Max Production in January.

Trump Impact

GM is back but Boeing has gone the other way. And what is the demand for cars going to be?

Trump did not cause the GM strike or the fiasco at Boeing, but his inept tariff policy and trade war with China are starting to bite.

Don't expect Trump's deal with China to fix anything.

In the Trade Lie of the Day Kudlow made the claim "US Exports to China Will Double". Here's a hint, they won't.

It's important to note Trump's Amazing Trade Deal: Details a Complete Mystery.

Parts of the deal are classified information. Shhhh.

Much Ado Over Nothing

Trump says the trade deal will be signed on January 15.

It won't do much of anything, except of course to get Trump to brag about the greatest deal in history.

Mike "Mish" Shedlock

Manufacturing ISM Worst Since 2009 on Severe Contraction of Export Orders

The Manufacturing ISM is in the second month of contraction and the worst since June of 2009.

Manufacturing ISM Contracts Third Month, Production Down Sharper

The manufacturing sector entered its third month of contraction with production falling faster.

US Manufacturing Recession Begins: ISM Contracts First Time in 3 Years

The manufacturing ISM dipped below the 50 mark signaling contraction. New orders, production, and employment are down.

US Manufacturing PMI Declines First Time Since September 2009

According to the Markit Flash Manufacturing PMI survey, manufacturing activity in the US declined for the first time since September 2009.

PMI Services Lowest Reading in 5 Months; ISM Services Highest Reading Since October 2015

The regional economic reports from the Fed, as well as independent reports from the ISM, have been interesting to watch.

Tale of Two Indexes: Non-Manufacturing ISM vs Markit PMI

The ISM Non-Manufacturing Index strengthened in October. Markit's Service PMI weakened.

ISM-Markit Manufacturing Divergence Widens Again

The divergence between the ISM Report on Business and the Markit PMI manufacturing index widened this month. ISM increased slightly from 54.8 to 54.9 while the Markit reading declined slightly to an 8-month low of 52.7 from 52.8

Another Recession Warning: ISM Contracts 4th Month

ISM fired another recession warning today as the manufacturing contraction extends another month.

Shockingly Weak Retail Sales: Down 1.2% in December, Sharpest Decline Since 2009

Holiday retail spending came in shockingly bad. Retail sales fell 1.2 percent vs economists expectations of a rise.