The US manufacturing sector contracted in December for the second consecutive month and the Manufacturing PMI fell to its lowest reading since May 2020, according to the Institute for Supply Management’s Manufacturing ISM Report on Business, released today. The Manufacturing PMI fell to a reading of 48.4% in December from 49.0% in November. The Manufacturing PMI was last in this territory in May 2020 when it registered a reading of 43.5%.

December’s reading of the Manufacturing PMI indicates an overall economic contraction after 30 straight months of expansion.

“The US manufacturing sector again contracted, with the Manufacturing PMI at its lowest level since the coronavirus pandemic recovery began,” said Timothy Fiori, chair of the Institute for Supply Management’s Manufacturing Business Survey Committee.

The measure of employment, however, expanded to 51.4% in December, up from the November reading of 48.4%.

Fiori noted that labor management sentiment continued to shift, with a number of panelists' companies reducing employment levels through hiring freezes, attrition and — since November — layoffs.

“In December, layoffs were mentioned in 11% of employment comments, down from 14% in November, likely due to the holiday period,” Fiori said. “Turnover rates improved marginally, recording their lowest level (27% of comments) since tracking began in June 2021. For those companies expanding their workforces, comments continue to support an improving hiring environment.”

The Manufacturing PMI is based on data compiled from purchasing and supply executives across the US.