Indicating a second consecutive month of contraction in U.S. manufacturing activity, the Institute for Supply Management released a report on Monday unexpectedly showing a drop by its manufacturing index in the month of December.
The ISM said its purchasing managers index edged down to 48.2 in December from 48.6 in November, with a reading below 50 indicating a contraction in manufacturing activity.
The modest drop came as a surprise to economists, as the consensus estimate called for the index to inch up to a reading of 49.2.
With the unexpected decrease, the manufacturing index dropped to its lowest level since hitting 45.8 in June of 2009.
Bradley Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, “As was the case in November, 10 out of 18 manufacturing industries reported contraction in December.”
“Contraction in new orders, production, employment and raw materials inventories accounted for the overall softness in December,” he added.
The unexpected drop by the headline index was partly due to a significant downturn in employment, as the employment index dropped to 48.1 in December from 51.3 in November.
The prices index also dipped to 33.5 in December from 35.5 in November, indicating lower raw materials prices for the fourteenth consecutive month.
While the new orders index edged up to 49.2 from 48.9 and the production index rose to 49.8 from 49.2, the readings below 50 continued to indicate contraction.
The ISM is scheduled to release a separate report on service sector activity in the month of December on Wednesday. The non-manufacturing index is expected to rise to 56.5 in December from 55.9 in November.
The material has been provided by InstaForex Company – www.instaforex.com