US manufacturing PMI rises to nine-month high

WASHINGTON, Jan 5 (Reuters): US manufacturing moved closer to recovery in December, with production rebounding and new orders rising further, but the outlook remains uncertain amid the threat of higher tariffs that could raise prices of imported raw materials.
Despite the increase in the Institute for Supply Management's (ISM) Purchasing Managers Index (PMI) to a nine-month high last month, the tone of the survey was less upbeat, with phrases such as "volume decreases" and "significant slowdown" appearing in some of the comments from respondents. None of the six largest manufacturing industries grew last month.
"Manufacturers ended the year with a hint of optimism, but they could face some pretty stiff challenges in the new year," said Sal Guatieri, a senior economist at BMO Capital Markets.
The ISM said on Friday that its manufacturing PMI increased to 49.3 last month, the highest reading since March, from 48.4 in November. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.3 per cent of the economy.
December marked the ninth consecutive month that the PMI remained below the 50 threshold. Economists polled by Reuters had forecast the PMI would be unchanged at 48.4.
Seven industries, including primary metals, electrical equipment, appliances and components as well as paper products and miscellaneous manufacturing reported growth last month. Among the seven industries reporting contraction were textile mills, machinery and transportation equipment.