(RTTNews) - Manufacturing activity in the U.S. contracted at a slower rate in the month of December, according to a report released by the Institute for Supply Management on Friday.
The ISM said its manufacturing PMI inched up to 49.3 in December from 48.4 in November, although a reading below 50 still indicates contraction. Economists had expected the index to come in unchanged.
With the unexpected increase, the manufacturing PMI reached its highest level since hitting 50.3 in March 2024.
The uptick by the headline index came amid an acceleration by the pace of growth by new orders as well as a turnaround by production.
The new orders index rose to 52.5 in December from 50.4 in November, while the production index climbed to 50.3 in December from 46.8 in November.
Meanwhile, the report said the employment index slid to 45.3 in December from 48.1 in November, indicating the manufacturing sector shed jobs at a faster rate.
The ISM also said the prices index increased to 52.5 in December from 50.3 in November, pointing to an accelerated pace of price growth.
"After languishing for much of the past two years, both the production and new orders components of the ISM manufacturing report have moved into growth territory," said ING Chief International Economist James Knightley.
He added, "However, caution remains with the employment component suggesting jobs continue to be shed while tariff uncertainty remains a concern, particularly for those with international supply chains and those where exports are an important source of revenue."
Next Tuesday, the ISM is scheduled to release a separate report on service sector activity in the month of December.
The services PMI is currently expected to rise to 53.5 in December from 52.1 in November, with a reading above 50 indicating growth.
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