Friday, February 3, 2023

Manufacturing activity confirms contraction in December

Fearing a long recession in the coming months, many companies have reduced the pace of their production.

The ISM index, which measures activity in the sector, stood at 48.4% compared to 49% in the previous month.

The decline is much bigger than expected: Analysts had expected a rate of 48.5%, according to a consensus compiled by Briefing.com.

Any mark on this index below 50% indicates a significant decline in activity.

The index fell to 49%, down 1.2 percentage points from October’s level (50.2%). This is the fifth consecutive decline recorded by the manufacturing sector in the US, which went into contraction in November.

An index below 50% indicates a contraction of activity.

That’s a bigger decline than analysts had anticipated, according to analyst consensus compiled by specialty site Briefing.com, who forecast 49.8% for ISM manufacturing.

For its part, manufacturing activity in the United States was down 6.2 points since August, falling to -9.9 points, a measure indicating a clear contraction in activity. Analysts had expected a positive figure of 2.3 points.

In August, the country registered the second biggest decline in manufacturing activity in its history.

“Factories began to normalize activity in response to a fall in demand in the context of rising interest rates,” he said. Rubella Farooqi, chief economist at High Frequency Economics, said higher interest rates to combat inflation make consumer and investment credit more expensive and cool the economy.

Nation World News Desk
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