Manufacturing activity slowed in December in the US amid some decline in consumer demand, but Display problems It began to decline and the index of prices paid by factories for raw materials fell to its lowest level since the early 1990s. epidemic in the year 2020.
The Institute of Supply Management (ISM) said, on Tuesday, that its national index of factory activity fell to a record low of 58.7 last month, its lowest level since last January and after 61.1 in November.
A reading above 50 indicates an expansion in manufacturing, which makes up 11.9% of the US economy in a Reuters poll. Economists had expected a drop in the index to 60.1.
The ISM supply index fell to 64.9 from 72.2 in November. A record of over 50% indicates fewer shipments to factories.
There has been a shortage of raw materials since economies began to recover from the COVID-19 pandemic. The shortage also suffered from the change in demand for services for goods at the start of the pandemic. Millions of workers required to produce and transport raw materials remain out of the workforce.
Tentative evidence of improvements in the supply chain indicates that inflation in factory purchases will begin to decline soon.
The index of prices paid by manufacturers fell to 68.2 last month, its lowest level since November 2020, and from 82.4 in November. This was the biggest drop since March 2020, when non-essential businesses were closed.
All of this supports the Fed’s perception that the current period of high inflation is temporary. Inflation is well above the central bank’s 2% flexible target.
Factories hired more workers. A gauge of factory employment rose to an eight-month high, while a sharp drop in claims for unemployment benefits pointed to an acceleration in job growth in December.
The Labor Department will release its December jobs report this Friday.
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