US manufacturing downturn eases more than expected, ISM data shows

The manufacturing downturn in the US eased a little more than expected in December, according to the Institute for Supply Management's purchasing managers' index (PMI) released on Wednesday.

The manufacturing PMI increased by 0.7 points to 47.4, up from 46.7 in November and the highest reading since September.

While this was the 14th straight month in negative territory – indicated by any reading below 50 – economists had expected a smaller increase to 47.1.

"The US manufacturing sector continued to contract, but at a slightly slower rate in December as compared to November," said Timothy Fiore, chair of the ISM.

"Demand remains soft, and production execution is stable compared to November, as panelists’ companies continue to manage outputs, material inputs and labor costs. Suppliers continue to have capacity."

The decline in demand worsened with the new orders sub-index contracting faster at 47.1, down from 48.3 the month before, while inventory levels decreased as manufacturers became more accommodative for future production.

The fall in manufacturing employment continued, but the decline eased to 48.1 from 45.8. "Panelists’ companies maintained production levels month over month and continued actions to reduce head counts in December, primarily through layoffs," Fiore said.