U.S. Factory Gauge Shows 14th Month Of Shrinking Activity
A measure of US factory activity remained stuck in contraction territory for a 14th month at the end of 2023, restrained by weaker orders.
(Bloomberg) -- A measure of US factory activity remained stuck in contraction territory for a 14th month at the end of 2023, restrained by weaker orders.
The Institute for Supply Management’s manufacturing gauge edged up 0.7 point to 47.4 last month, helped by a pickup in production, according to data released Wednesday. Readings below 50 indicate contraction, and the figure was near economists’ expectations.
The December result extends the longest stretch of shrinking activity since 2000-2001, when the dot-com bubble burst and sparked a recession.
Manufacturers were beset last year by high borrowing costs and waning demand for goods that prompted some companies to rethink capital spending plans. While the ISM gauge still shows contraction, it is holding in a range that suggests activity has stabilized at a weak level.
Factory purchasing managers are more upbeat about this year’s prospects as the Federal Reserve has signaled a pivot to lower interest rates.
In the ISM’s latest semiannual economic forecast, 15 of 18 manufacturing industries project that revenue will increase, while capital expenditures are seen rising almost 12%.
“We think we're going to have a strong year,’’ Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said Dec. 15 on Bloomberg Television. “The second half will be stronger than the first half.’’
Cheaper commodities are benefiting many of the nation’s producers. Wednesday’s data showed a measure of prices paid for materials declined in December from a month earlier by the most in seven months. The prices paid index decreased by 4.7 points to 45.2, helped by a drop in oil prices to an almost six-month low in December.
The ISM’s factory employment index contracted in December but at the slowest pace in three months. Production expanded, even as new orders contracted for a 16th straight month.
--With assistance from Chris Middleton.
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