US PMI Manufacturing Index was finalized at 49.4 in December, a slight dip from November’s 49.7, marking the sixth consecutive month of contraction in the sector. Although the decline in manufacturing health remains modest overall, the pace of deterioration has quickened slightly compared to the prior month.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, highlighted the challenges: “US factories reported a tough end to 2024, and have scaled back their optimism for growth in the year ahead.”
He pointed to rising production cuts in December as inflows of new orders disappointed. The fleeting boost in customer demand seen after the election in November has faded, leaving factories to contend with subdued sales, particularly in export markets.
Despite the downturn, many manufacturers are cautiously optimistic about the New Year, hoping that the incoming administration’s policies might spur growth. Expectations of reduced regulations, lower taxes, and increased demand for US goods via potential tariffs are contributing to this sentiment. Confidence, which hit a low in June, received a notable boost following the election result in November.
However, firms are increasingly wary of rising input costs and the resurgence of inflation, which could limit the scale of Fed rate cuts in the coming year.
