US Manufacturing Slows in December

Copyright, David McNew, Getty Images

US Manufacturing Growth Slows in December

Growth in the U.S. manufacturing sector slowed for the second straight month in December, partly due to falling crude prices and the labor slowdown at West Coast ports.

The Institute for Supply Management reported Friday that its purchasing managers index for the sector fell to 55.5 last month from 58.7 in November.

The PMI remained above where it started in 2014, at 51.3. Anything above 50 denotes growth.

December survey respondents said growth in new orders and production slowed and inventories contracted during the month, though hiring picked up.

Prices also continued to fall, and at a faster pace, mainly reflecting the fall in prices of commodities led by oil.

Respondents in the chemicals and oil products industries said buyers are holding off purchases and running down inventories as they wait for lower prices. 

Other manufacturers cited the standoff between West Coast port owners and unions for delays in getting key materials from Asia for their businesses.

"West Coast port issues have greatly impacted our incoming materials. We are air freighting many parts from Japan and Asia to support production while parts sit at the dock," said one respondent from the fabricated metal products industry.

However one industry analyst is optimistic about  future growth. While activity slowed at the turn of the year, it seems clear that the U.S. factory sector will likely remain on a moderate growth track,” said Cliff Waldman, director of economic studies for the MAPI Foundation. “The port slowdown could influence factory sector performance over the next few months or more, however. And, more significantly, the weak economic outlook outside of the U.S. is troubling for the export strength that U.S. goods producers have come to increasingly rely on. Short-term performance issues in the Eurozone, China, and Latin America, and a brewing crisis in Russia, will affect all goods production markets to some extent both in terms of demand and pricing.”

Copyright Agence France-Presse, 2015, IW Staff

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