Economy

Manufacturing economy weakest in a decade as December ISM index comes in at 47.2

Key Points
  • The Institute for Supply Management said Friday that its manufacturing index fell in December to 47.2.
  • That's its lowest level since June 2009, when it hit 46.3.
  • "Global trade remains the most significant cross-industry issue," said ISM Chair Timothy R. Fiore.
A worker attaches a rear door to an X model SUV at the BMW manufacturing facility in Greer, South Carolina, November 4, 2019.
Charles Mostoller | Reuters

Manufacturing activity in the U.S. contracted to its lowest level in more than a decade last month even as China and the U.S. showed progress on the trade front.

The Institute for Supply Management said Friday that its manufacturing index fell in December to 47.2. That's its lowest level since June 2009, when it hit 46.3. Economists polled by Reuters expected a reading of 49 for December. Anything below 50 represents sector contraction.

December also marked the fifth straight month of contraction for the U.S. manufacturing sector.

"Global trade remains the most significant cross-industry issue, but there are signs that several industry sectors will improve as a result of the phase-one trade agreement between the U.S. and China," said Timothy R. Fiore, chair of the institute, in a statement.

China and the U.S. announced last month that they reached a so-called "phase one" trade deal, which President Donald Trump later said would be signed on Jan. 15.

Still, ISM said new orders in the manufacturing sector dropped 0.4 percentage point in December to 46.8, down from a November reading of 47.2. Employment, order backlogs and inventories also fell last month while prices rose.

WATCH: The November ISM misses expectations

VIDEO0:4300:43
November ISM nonmanufacturing misses expectations, 53.9 vs. 54.5 expected