Manufacturing Sector Experiences Continued Decline in December

Manufacturing activity faced another setback in December, marking the tenth consecutive month of contraction, as reported by the Institute for Supply Management (ISM). The latest Manufacturing Report on Business highlights a persistent downturn in the industry, as key metrics continue to trend negatively.

Key Indicators Show Contraction

The Purchasing Managers’ Index (PMI) for December registered at 47.9, reflecting a decrease of 0.3 points from November. A PMI reading below 50 indicates contraction, and December’s figure also fell short of the 12-month average of 48.9, representing the lowest reading observed in 2025.

Sector Performance

Among the manufacturing sectors, only two reported growth in December: Electrical Equipment, Appliances, & Components and Computer & Electronic Products. The majority of sectors remained in contraction, including:

• Transportation Equipment
• Machinery
• Chemicals
• Food and Beverage
• Primary Metals

December Metrics Overview

Key metrics from the ISM report included:

• New Orders: 47.7 (up 0.3 points), marking fourth consecutive months of contraction
• Production: 51.0 (down 0.4 points), registering growth for the second month in a row
• Employment: 44.9 (up 0.9 points), in contraction for the eleventh consecutive month
• Supplier Deliveries: 50.8 (up 1.5 points), indicating slower delivery times
• Inventories: 45.2 (down 3.7 points), contracting for the eighth consecutive month
• Customers’ Inventories: 43.3 (down 1.4 points), identified as too low
• Prices: 58.5 (unchanged from November), increasing for the fifteenth consecutive month

Panelist Insights

Comments from industry panelists highlighted lingering challenges, including tariffs and broader economic influencers. A panelist from the Chemical Products sector stated, “Winding up the year with mixed results. It has not been a great year. We have had some success holding the line on costs; however, real consumer spending is down and tariffs are ultimately to blame. I hope for some return to free trade, which is what consumers have ‘voted for’ with their spending.”

Industry Outlook

In an interview with Logistics Management, Susan Spence, Chair of ISM’s Manufacturing Business Survey Committee, emphasized the overarching weaknesses observed throughout the year. “A major concern in this report is that 85% of the manufacturing sector was in contraction in December, up from 58% in November, with the percentage of manufacturing GDP in strong contraction up to 43%,” Spence noted. “Overall, the sentiment is not great, nor is the employment picture.”

For more detailed coverage of December’s manufacturing report, visit Logistics Management.