U.S. Manufacturing PMI Slips to 47.9 in December, Marking 2025 Low — Evening Brief – 01.05.26
U.S. manufacturing activity closed out 2025 on its back foot, contracting at the fastest pace of the year in December. The ISM Manufacturing PMI fell to 47.9, slipping from 48.2 in November and missing the consensus forecast of 48.3. The reading marks a new low for 2025, underscoring the persistent headwinds facing the industrial sector as it struggles to gain traction amid broader economic uncertainty.
According to Susan Spence, Chair of the ISM Manufacturing Business Survey Committee, the deterioration was driven largely by pullbacks in production and inventory levels. “In December, U.S. manufacturing activity contracted at a faster rate, with pullbacks in the Production and Inventories indexes leading to the 0.3-percentage point decrease,” Spence said. She characterized recent fluctuations as a “short-term ‘bubble’ of improvement,” noting that the reversal of November’s gains highlights the volatility that has defined the manufacturing landscape throughout the year.
The breadth of the slowdown widened significantly in the final month of the year. The report indicates that 85% of manufacturing GDP was in contraction during December, a sharp increase from 58% in November. Furthermore, the share of the sector in “strong contraction” (defined as a PMI of 45 or lower) climbed to 43%, up from 39% the prior month, signaling that distress is becoming more entrenched across industries.
Despite the gloomy headline print, the report offered glimmers of resilience. The New Orders Index edged up to 47.7 from 47.4, while the Backlog of Orders improved to 45.8. Additionally, the Customers’ Inventories Index dropped further into “too low” territory at 43.3, a dynamic that could eventually spur restocking activity. Employment also showed modest improvement, with the index rising to 44.9 from 44.0.
Other key metrics showed mixed results. Production eased slightly to 51.0, while Supplier Deliveries rose to 50.8, indicating slower delivery times. Meanwhile, pricing pressures remained sticky but stable, with the Prices Index holding at 58.5, matching the prior month’s reading. As manufacturers head into 2026, the data paints a picture of a sector still searching for a bottom, balancing weak demand against early signs of stabilization in order flow.