US manufacturing activity slows for 10th consecutive month

US manufacturing contracted for the 10th consecutive month in December, falling to 47.9 from 48.2 in November, according to the latest Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI).

The country’s December PMI marks the lowest reading of 2025, according to Susan Spence, chair of the ISM Manufacturing Business Survey Committee.

“In December, US manufacturing activity contracted at a faster rate, with pullbacks in the production and inventories indexes, leading to the 0.3-percentage point decrease of the manufacturing PMI,” Spence said.

“Those two sub-indexes increased in November, so their contraction this month continues the short-term ‘bubble’ of improvement indicative in the last several months of PMI data – and a hallmark of recent economic uncertainty in manufacturing,” she added.

The fall in US manufacturing activity pushes the sector further below the key 50-point mark, which separates contraction from expansion in the world’s largest economy.

Economic uncertainty has weighed on the sector since President Donald Trump introduced his “America First” trade tariffs, which took effect in August last year against more than 90 economies worldwide.

This has resulted in the fastest contraction in raw materials inventories since October 2024, according to ISM. The impact was also seen in the ISM Prices Index, which registered a reading of 58.5 in December. While it matched the November figure, the data shows that raw materials prices increased for the 15th straight month.

“The Prices Index reading continues to be driven by increases in steel and aluminium prices that impact the entire value chain, as well as tariffs applied to many imported goods,” Spence said.

Of the six largest manufacturing industries, four – machinery, transportation equipment, computer and electronic products, and food, beverage and tobacco products – reported price increases in December.

Meanwhile, the New Export Orders Index remained in contraction territory in December, registering a reading of 46.8, up slightly from November’s figure of 46.2.

“Despite a slight improvement in the New Export Orders Index, trade frictions continue to weigh on demand,” Spence said.

“Many panellists still report softer international orders tied to tariffs and ongoing uncertainty around US economic policy.”

The ISM Imports Index also pushed further into contraction territory for the ninth consecutive month in December, falling to 44.6 from 48.9 in November as tariff-related pricing pressures continue to result in softer demand.