December data indicated a slower, albeit still solid improvement in the health of the U.S. manufacturing sector.
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The headline PMI dipped to a 15-month low amid a weaker rise in new business and the joint-softest expansion in output since September 2017.
At the same time, the pace of job creation eased to an 18-month low, despite a further rise in backlogs.
Notably, business confidence among manufacturers fell again in December, with the degree of optimism dipping to the lowest since October 2016.
Meanwhile, inflationary pressures eased at the end of 2018.
The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index (PMI) posted 53.8 in December, down from 55.3 in November.
The latest headline figure suggested a weaker, but still strong, improvement in operating conditions across the goods producting sector.
Although ending the year with a softer overall expansion, the final quarterly average of 2018 was strong and quicker than that seen in 2017.
Production growth remained solid in December, and at a rate that matched that seen in November.
The rise in output was attributed to greater new order volumes.
That said, the upturn was nonethless the joint-weakest in 15 months.
Following a slight pick up in November, new order growth eased in December.
Though strong, the pace of expansion was the weakest since September 2017.
Although some firms stated that the upturn was driven by new order inflows from newly acquired clients, others cited concerns surrounding a drop in client demand compared to earlier in the year.
Conversely, new export business grew at an accelerated pace in December.
New orders from abroad increased for the fifth successive month and at the fastest rate since January amid stronger foreign client demand.
That said, a weaker overall rise in new orders led to a drop in business confidence among manufacturing firms in December.
The degree of optimism was strong, but well below the long-run series average.
Positive sentiment was dampened by concerns surrounding the longevity of new business growth.
Moreover, future output expectations were at their lowest since October 2016.
Despite a moderate rise in backlogs in December, the rate of job creation softened to an 18-month low.
Although firms noted an increase in workforce numbers following greater production requirements, others suggested that low rates of employee retention had weighed on growth.
Meanwhile, rates of both input price and output charge inflation eased in December.
Greater cost burdens were reportedly due to raw material stockpiling among manufacturers, shortages of electronics components and the ongoing impact of tariffs.
That said, the rate of inflation dipped to an 11-month low.
Factory gate prices meanwhile rose at the weakest rate in 2018. ■