Economy

ISM: Manufacturing still contracting, but at slower pace

January 3, 2025

While the US manufacturing sector contracted again in December, the pace of contraction was slower than in most other months of 2024.

The Institute for Supply Management (ISM) reported a manufacturing PMI of 49.3% for December, 0.9 points higher than the November reading.

“U.S. manufacturing activity contracted again in December, but at a slower rate compared to November,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.

The December reading reveals that economic activity in the US manufacturing sector contracted for the ninth consecutive month. The manufacturing PMI has been in contraction territory for 25 of the last 26 months, ISM noted.

“Demand showed signs of improving, while output stabilized and inputs stayed accommodative,” Fiore added.

Highlights on the demand side include the New Orders Index continuing to expand, New Export Orders rising, and the Customers’ Inventories Index falling into ‘too low’ territory, according to Fiore.

Primary metals was one of seven industries reporting growth in December. Meanwhile, the fabricated metal products, machinery, and transportation equipment industries were among those reporting contraction.

The highest PMI reading of 2024 was 50.3% in March, while the lowest was 46.5% in October. The monthly average for the year was 48.3%.

A manufacturing PMI above 42.5% over an extended period indicates expansion in the overall economy. So December’s PMI of 49.3% suggests the overall economy expanded for the 56th month, after one month of contraction in April 2020.

“The past relationship between the Manufacturing PMI^® and the overall economy indicates that the December reading (49.3 percent) corresponds to a change of plus-1.9 percent in real gross domestic product (GDP) on an annualized basis,” Fiore noted.

Comments from executives

“There is definitely an uptick this month, though not a stable one.” – Primary metals executive

“Significant slowdown in production requirements in the last two months of the year.” – Machinery executive

“Order levels well below forecast projections.” – Fabricated metal products executive

Editor’s note: Tom Derry, CEO of the Institute for Supply Management, will be a keynote speaker at the Tampa Steel Conference 2025 on Monday, Feb. 3. With a unique vantage point to observe major macroeconomic trends and the development of global supply chains, Tom’s keynote won’t be one to miss! Visit tampasteelconference.com for more information and to register.

Laura Miller

Laura Miller is a reporter and editor for Steel Market Update. She has held a variety of positions within the steel industry since 2007, including reporting and editing for Steel Business Briefing/Platts, the Association for Iron and Steel Technology, and Kallanish Commodities, as well as marketing for what was then known as ThyssenKrupp Steel USA (now AM/NS Calvert). After a five-year hiatus working across other industries, she returned to steel in 2021 and has covered the flat rolled, tubular, and trade areas of the industry. She is a member of the Association of Women in the Metal Industries and a past-president of the AWMI Pittsburgh Chapter. She holds a BA in Latin American Studies from Edinboro University of Pennsylvania. She can be reached at laura@steelmarketupdate.com or 724-759-7869.