(Bloomberg) — US manufacturing activity shrank in December by the most since 2024, capping a rough year for American factories.<\/p>\n
The Institute for Supply Management\u2019s manufacturing index edged down to 47.9 from 48.2, according to data released Monday. The measure has been below 50, which indicates contraction, for 10 straight months.<\/p>\n
The decline in the measure reflected producers drawing down their raw materials inventories at the fastest rate since October 2024. That indicates many firms are relying on existing stockpiles to satisfy tepid demand.<\/p>\n
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Plus, materials costs remain elevated. The ISM prices-paid index, which held at 58.5 last month, is 6 points higher than it was at the end of 2024.<\/p>\n
New orders contracted for a fourth month and export bookings remained weak, based on the ISM data. Headcount shrank for an eleventh straight month, albeit at a slower pace, amid modest production growth.<\/p>\n
\u201cUS manufacturing remained in contraction mode for most of 2025, and today\u2019s report doesn\u2019t indicate a turnaround anytime soon,\u201d Priscilla Thiagamoorthy, senior economist at BMO Capital Markets, said in a note. \u201cWeakness in the factory sector is expected to persist, even as the broader economy continues to expand.\u201d<\/p>\n
One bright spot in the report was customer inventories shrank at the fastest pace since October 2022, suggesting factory orders and production could firm in coming months.<\/p>\n
Still, tariffs and the overall economic uncertainty that President Donald Trump\u2019s shifting trade policy caused during his first year in office have proved challenging for many companies as they weighed expansion plans.<\/p>\n
Select ISM Industry Comments<\/p>\n
\u201cIt has not been a great year. We have had some success holding the line on costs; however, real consumer spending is down and tariffs are ultimately to blame.\u201d \u2014 Chemical Products<\/p>\n
\u201cTrough conditions continue: depressed business activity, some seasonal but largely impacted by customer issues due to interest rates, tariffs, low oil commodity pricing and limited housing starts.\u201d \u2014 Machinery<\/p>\n
\u201cThings are quieter regarding tariffs, but prices for all products remain higher. Our costs have increased, so we have increased prices for our customers to compensate. Margins have deteriorated, as full pass through (of cost increases) is not possible.\u201d \u2014 Computer & Electronic Products<\/p>\n
\u201cThings are not improving in the transportation equipment market. Many customers are ordering for 2026, but those orders are 20% to 30% below their historical buying patterns.\u201d \u2014 Transportation Equipment<\/p>\n
\u201cOrder levels have continued to decline: We had a bad October, an awful November and a dismal December. January and February don\u2019t look too good, as bookings are down 25% compared to the first two months of 2025.\u201d \u2014 Fabricated Metal Products<\/p>\n
\u201cMorale is very low across manufacturing in general. The cost of living is very high, and component costs are increasing with folks citing tariffs and other price increases.\u201d \u2014 Electrical Equipment, Appliances & Components<\/p>\n
Fifteen industries, led by apparel, wood products and textiles, contracted in December. Just two industries reported growth, the fewest since the end of 2023, the ISM report showed.<\/p>\n
But looking ahead, abating tariff uncertainty and the passage of the One Big Beautiful Bill Act are anticipated to offer a tailwind to capital expenditures this year.<\/p>\n
What Bloomberg Economics Says…<\/p>\n
\u201cWe take the downside surprise in December\u2019s ISM Manufacturing PMI with a grain of salt. The headline index was dragged down by a faster decline in inventories \u2014 but with customer inventories also low, we expect factories to see improved demand in the months ahead.\u201d<\/p>\n
\u2014 Stuart Paul, economist<\/p>\n
To read the full note, click here<\/p>\n
The ISM\u2019s gauge of imports shrank to a seven-month low, while supplier delivery times slowed and order backlogs continued to shrink.<\/p>\n
(Adds economist\u2019s comment, Bloomberg Economics\u2019 comment)<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — US manufacturing activity shrank in December by the most since 2024, capping a rough year for…\n","protected":false},"author":2,"featured_media":223214,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[122600,1877,114,184,85,122598,122597,46,122599],"class_list":{"0":"post-223213","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-american-factories","9":"tag-bloomberg","10":"tag-business","11":"tag-economy","12":"tag-il","13":"tag-inventories","14":"tag-ism","15":"tag-israel","16":"tag-us-manufacturing"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/223213","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=223213"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/223213\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/223214"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=223213"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=223213"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=223213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}