U.S. Manufacturing Index Drops To Six-Month Low In December

(RTTNews) - After reporting a slight slowdown in the pace of growth in the U.S. manufacturing sector in the previous month, the Institute for Supply Management released a report on Friday showing that the pace of growth in the sector continued to slow in December.

The ISM said its purchasing managers index fell to 55.5 in December from 58.7 in November, although a reading above 50 indicates continued growth in the manufacturing sector.

Economists had expected the index to drop to 57.5. With the bigger than expected decrease, the index fell to its lowest level since hitting 55.3 in June.

Bradley Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, "Comments from the panel are mixed, with some indicating that falling oil prices have an upside while others indicate a downside."

"Other comments mention the negative impact on imported materials shipment due to the West Coast dock slowdown," he added.

The drop by the headline index was partly due to notably slower new order growth, as the new orders index tumbled to 57.3 in December from 66.0 in November.

The production index also slid to 58.8 in December from 64.4 in November, while the backlog of orders dipped to 52.5 from 55.0.

The report also showed that the prices index dropped to 38.5 in December from 44.5 in November, indicating lower raw materials prices.

On the other hand, the ISM said the employment index climbed to 56.8 in December from 54.9 in November, reaching its highest level since August.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "Overall, it makes sense that manufacturing activity should be coming off the boil when global demand has eased and the dollar has risen."

"But the strength of domestic demand will ensure that industry and the wider economy still perform particularly well in 2015," he added.

Next Tuesday, the ISM is scheduled to release a separate report on activity in the service sector in the month of December.