Manufacturing recovery momentum slows down US manufacturing PMI falls to 51.8 in December

The Zhitong Finance App learned that data released by S&P Global on Friday showed that the final value of the US manufacturing purchasing managers' index (PMI) for December was 51.8, which was in line with the previous initial value and market expectations, but fell slightly from 52.2 in November. This reading is still above the boom and bust line of 50, indicating that manufacturing activity continues to expand, but the intensity of expansion has fallen to its lowest level in the past five months, indicating that the momentum for manufacturing recovery is slowing down.

Judging from the sub-indicators, although manufacturing production continued to grow in December, the growth rate was significantly slower than the previous month; at the same time, new orders contracted for the first time in a year, reflecting that the demand side was beginning to show fatigue. S&P Global pointed out that this change is partly related to tariff factors. Tariffs continue to push up the operating costs of enterprises, making manufacturing companies face greater operating pressure. Despite this, the increase in both input and output prices fell to their lowest level in 11 months, indicating that the pressure on cost transmission has eased to some extent.

Chris Williamson, chief global business economist at S&P, pointed out that the gap between production growth and falling orders has now widened to the largest level since the peak of the 2008 global financial crisis, highlighting the potential risks faced by the manufacturing industry.

Williamson warned that if demand does not improve as soon as possible, current factory production levels will obviously be difficult to sustain, and companies may be forced to cut production capacity, which in turn will have an adverse impact on employment, and wage and employment data may also be put under pressure. This judgment made the market cautious about the outlook for manufacturing and labor markets in the coming months.

As an important leading indicator for measuring the sentiment of the manufacturing industry, PMI has always received great attention from traders and investors. Purchasing managers can usually grasp business conditions earlier, so this indicator is often regarded as a weather vane for overall economic trends. Generally speaking, higher PMI is seen as favorable to the US dollar, while lower than expected is interpreted as negative. This data is in full agreement with expectations, and the overall impact on the US dollar is neutral.

Overall, the PMI remained in the expansion range in December, indicating that the US manufacturing industry is still resilient under multiple economic pressures, but signs of slowing growth and weakening new orders also remind the market that the basis for manufacturing recovery is not stable. In the future, investors will continue to pay close attention to PMI and other key economic indicators to determine whether the US manufacturing industry and the overall economy can maintain growth momentum in the context of weakening demand and intertwined cost pressures.