ISM Manufacturing PMI at 47.9%

Source: Dukascopy Bank SA
The ISM Manufacturing PMI fell to 47.9 in December 2025, showing that the U.S. manufacturing sector contracted for the 10th month in a row. This was a 0.3 percentage point decline from November and the lowest reading of the year. Despite the ongoing weakness in manufacturing, the overall U.S. economy continued to grow for the 68th consecutive month.

Production remained in expansion territory at 51 percent, though growth slowed compared with the prior month. Demand stayed soft, with new orders contracting for a fourth straight month at 47.7 percent. Employment also continued to weaken, as the Employment Index fell to 44.9 percent, marking 11 consecutive months of contraction. Companies are cutting staff or leaving positions unfilled due to uncertainty about near-term demand.

Cost pressures remained elevated. Raw material prices increased for the 15th straight month, with the Prices Index holding at 58.5 percent, driven mainly by higher steel and aluminum prices and the impact of tariffs. Inventories contracted more quickly, with the index falling to 45.2 percent, while customers' inventories remained at low levels, a condition that can support future production.

Tariffs were highlighted as a major strain on manufacturers, raising costs, squeezing margins, and weakening export demand. One company in the miscellaneous manufacturing sector reported that tariffs caused a 17 percent drop in revenue in 2025, limiting its ability to hire or pay bonuses. In December, only two industries: Electrical Equipment, Appliances & Components, and Computer & Electronic Products. Remaining 15 industries remained in contraction, led by Apparel, Leather & Allied Products and Wood Products.
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