US: Manufacturing expansion at a low year, according to the IHS Markit PMI

LAST UPDATE: 17.01

Manufacturing growth in the US slowed to a one-year low in December, according to an IHS Markit survey, but data showed that labor supply shortages and supply chain problems were beginning to subside.

According to IHS Markit, the manufacturing PMI fell to 57.8 in mid-December from 58.3 in November. This is the lowest “flight” of the index since December 2020. Any value above 50 indicates an expansion. The manufacturing sector accounts for 12% of the economy. Financial analysts expected the manufacturing PMI at 58.5.

Manufacturing continues to face strong demand for goods and extremely scarce stocks in business, with supply chain problems due to the pandemic still being a “burden”.

These problems, however, will gradually begin to diminish as early as December, while the rate of job creation is at its highest level since June.

Shortages continue to affect the broader services sector, however, with the services PMI falling to 57.5 in December from 58 in November. Economists, in a survey by Reuters, expected the index to be around 58.5. The sector accounts for about two-thirds of the US economy.

The input price index in the sector was at a record high (since 2009 data), at 77.4 points.

This is a possible sign that inflation will remain high for some time.

The composite PMI, which measures total business activity, fell to 56.9 points, from 57.2 points in November.