Economic activity in the manufacturing sector expanded in December at a slower pace than in November, according to the Institute for Supply Management’s purchasing managers index for US manufacturing. December’s index reading registered 54.1, down from November’s reading of 59.3.

Any reading above 50% generally indicates improving conditions.

The employment portion of the index fell to a reading of 56.2 in December from 58.4 in November, also indicating expansion but at lower levels compared to prior periods.

“Comments from the panel reflect continued expanding business strength, but at much lower levels,” said Timothy Fiore, chair of the Institute for Supply Management’s Manufacturing Business Survey committee.

American manufacturers grew in December at the slowest pace since August 2016 as demand for their products softened, a potential warning sign for a US economy that’s been running close to full tilt for the past year, MarketWatch reported. Most economists predict growth will decelerate in 2019, but the US should continue to skirt a recession as long as the labor market remains strong. A strong jobs market has pulled the unemployment rate down to a 49-year low.