Chart and excerpts below by permission from the Institute for Supply Management ® ISM® 

Please consider the December 2022 Manufacturing ISM^® Report On Business^®

“The December Manufacturing PMI^® registered 48.4 percent, 0.6 percentage point lower than the 49 percent recorded in November. Regarding the overall economy, this figure indicates contraction after 30 straight months of expansion."

“The U.S. manufacturing sector again contracted, with the Manufacturing PMI^® at its lowest level since the coronavirus pandemic recovery began. With Business Survey Committee panelists reporting softening new order rates over the previous seven months, the December composite index reading reflects companies’ slowing their output.

Demand eased, with the (1) New Orders Index remaining in contraction territory, (2) New Export Orders Index markedly below 50 percent, (3) Customers’ Inventories Index in ‘just right’ territory, and (4) Backlog of Orders Index recovering slightly but still in strong contraction. 

“Of the six biggest manufacturing industries, one — Petroleum & Coal Products — registered moderate growth in December.

The ISM is a diffusion index, signaling direction not amount. For example a firm hiring 10 workers and a firm laying off 200 workers balances out. 

Diffusion indexes have issues. There is a survival bias and a weighting bias noted by the example above. 

That said, it's clear what's happening to manufacturing. Notably, prices have collapsed. 

Global Manufacturing Slump Continues at End of 2022 as Output and New Orders Fall Further

Yesterday, I noted Global Manufacturing Slump Continues at End of 2022 as Output and New Orders Fall Further

Excluding the early months of the pandemic, manufacturing is at the lowest level since 2009.

Nearly the whole world is slowing. 

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