The overall economy grew for the 116th straight time, the Institute for Supply Management reported Thursday.
According to the ISM's monthly report on business, the ISM index decreased to 54.1 in December from 59.3 in November.
Economists polled by IFR Markets predicted the index would be 58.0.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
The prices paid index decreased to 54.9 from 60.7, indicating higher raw materials prices for the 34th consecutive month. The employment index slid to 56.2 from 58.4.
The production index declined to 54.3 from 60.6, the new orders index fell to 51.1 from 62.1; the supplier deliveries index slipped to 57.5 from 62.5; the export orders index grew to 52.8 from 52.2; and the imports index declined to 52.7 from 53.6.
The inventories index fell to 51.2 from 52.9; the customers' inventories index increased to 41.7 from 41.5; and backlog of orders dropped to 50.0 from 56.4.
Respondents' comments included:
- “Growth appears to have stopped. Resources still focused on re-sourcing for U.S. tariff mitigation out of China.” (Computer & Electronic Products)
- “Brexit has become a problem due to labeling changes.” (Chemical Products)
- “Customer demand continues to decrease [due to] concerns about the economy and tariffs.” (Transportation Equipment)
- “Starting to see more and more inflationary increases for raw materials. Also, suppliers [are] forcing price increases due to tariffs.” (Food, Beverage & Tobacco Products)
- “The ongoing open issues with tariffs between U.S. and China are causing longer-term concerns about costs and sourcing strategies for our manufacturing operations. We were anticipating more clarity [regarding] tariffs at the end of 2018.” (Machinery)
- “Business is steady, but pace of incoming orders are slowing.” (Furniture & Related Products)
- “Business is robust for certain sectors [aerospace] and flat to downward for others [energy]. Tariffs continue to impact business direction and profit.” (Miscellaneous Manufacturing)
- “Caution seems to be the outlook. Are we in a correction, or is the market getting ready to slow over time?” (Fabricated Metal Products)
- “No major change in business operations towards the end of 2018; however, we are carefully monitoring oil prices and outside influence from market conditions to better understand our 2019 outlook and capital plans.” (Petroleum & Coal Products)
- “Customers are hedge buying in December as a result of announced price increases starting in January.” (Textile Mills)
