December ISM Report: Manufacturing PMI Falls to 47.9%, Lowest Reading of 2025

The ISM (Institute for Supply Management) Manufacturing PMI fell 0.3 points to 47.9% in December. This marks the lowest Manufacturing PMI of 2025 and the 10th consecutive month of contraction for the industry.

“Of the five subindexes that directly factor into the Manufacturing PMI, two (production and supplier deliveries) are in expansion territory, one more than in November,” says Susan Spence, chair of the ISM’s manufacturing business survey committee. A reading below 50% represents contraction.

The production index fell 0.4 points from the previous month but remained in expansion territory at 51.0%.

The new orders and employment indexes increased to 47.7% and 44.9%, respectively, indicating contraction at a slower rate than in November.

“Although the demand indicators are still in contraction, improvement in three indexes (new orders, backlog of orders and new export orders) and the customers’ inventories index remaining in ‘too low’ territory (and at an accelerated rate) are positive signs for December, but several consecutive months of gains in these indicators are necessary for a longer-term recovery,” Spence says.

Two manufacturing industries reported growth in December:

• Electrical equipment, appliances & components
• Computer & electronic products

“Of the six biggest manufacturing industries, one (computer & electronic products) registered growth in December,” Spence says.

Survey respondents reflected on 2025 business conditions and shared expectations for 2026.

“Winding up the year with mixed results. It has not been a great year. We have had some success holding the line on costs; however, real consumer spending is down, and tariffs are ultimately to blame,” writes a respondent in the chemical products sector. “I hope for some return to free trade, which is what consumers have ‘voted for’ with their spending.”

A respondent in the fabricated metal products industry writes, “Order levels have continued to decline: We had a bad October, an awful November and a dismal December. January and February don’t look too good, as bookings are down 25% compared to the first two months of 2025.”

Another respondent in miscellaneous manufacturing cited the workforce impact of declining revenue: “2025 revenue was down 17% due to tariffs. The lost revenue has inhibited our ability to offer bonuses to employees or create and hire for new positions.”