The Institute for Supply Management released its monthly manufacturing Purchasing Managers Index (PMI) on Jan. 3, reflecting December activity, which revealed a rebound in production and a continued increase in new orders.

The PMI — regarded as a reliable indicator of overall U.S. industrial economic health — was up 0.9 percentage points at 49.3% from November’s 48.4%, the highest reading since March 2024. It indicated that activity remained subdued but contracted at a slower rate than November.

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More granularly, the latest report showed that demand improved with a healthy increase in new orders (remaining in expansion territory), while production met November’s performance (meeting companies’ plans), and inputs continued to accommodate future demand growth.

Economists surveyed by Reuters had predicted the PMI would remain steady at 48.4%.

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The December PMI reading indicated contraction (anything below 50.0%) for a ninth consecutive month.

Here’s how the overall Manufacturing PMI has looked in bar chart form since the start of 2024.

source: tradingeconomics.com

Of the December PMI’s factoring indexes, four ended the month in contraction territory. The figure was driven by declines of 2.8 in employment and 1.7 in customers’ inventories, offset by increases of 4.1 in backlog orders, 3.5 in production and 2.2 in prices.

“Demand improved, production execution met November’s performance (and companies’ plans), de-staffing continued (but should end soon), and price growth was marginal,” ISM Manufacturing Business Survey Committee Chairman Timothy Fiore said in the institute’s December report.

Fiore added that 52% of manufacturing GDP contracted in December, down from 66% in November. The share of sector GDP registering a composite PMI calculation at or below 45% — considered a good barometer of overall manufacturing weakness — was 49% in December, a 1-point increase from November.

The seven manufacturing industries reporting growth in December were: Primary Metals; Electrical Equipment, Appliances & Components; Wood Products; Furniture & Related Products; Paper Products; Miscellaneous Manufacturing; and Plastics & Rubber Products.

The seven industries reporting contraction in November were: Textile Mills; Fabricated Metal Products; Printing & Related Support Activities; Machinery; Chemical Products; Transportation Equipment; and Nonmetallic Mineral Products.