December 2022 Manufacturing ISM Report On Business Indicates Backlog of Orders Contracted for 3rd Straight Month

Author photo: Steve Clouther
By Steve Clouther
Industry Trends

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected. Economic activity in the manufacturing sector contracted in December for the second consecutive Manufacturing ISM Reportmonth following a 29-month period of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The U.S. manufacturing sector contracted in December, as the Manufacturing PMI registered 48.4 percent, 0.6 percentage point below the reading of 49 percent recorded in November. This is the second month of contraction and will likely be the norm for the PMI at least through the first quarter of 2023

ISM’s New Orders Index contracted for the fourth consecutive month in December, registering 45.2 percent, a decrease of 2 percentage points compared to the 47.2 percent reported in November.

The Production Index registered 48.5 percent in December, 3 percentage points lower than the November reading of 51.5 percent, indicating contraction after 30 consecutive months of growth.

ISM’s Employment Index registered 51.4 percent in December, 3 percentage points higher than the November reading of 48.4 percent. The index indicated employment expanded after contracting for one month.

The delivery performance of suppliers to manufacturing organizations was faster for a third straight month in December, as the Supplier Deliveries Index registered 45.1 percent, 2.1 percentage points lower than the 47.2 percent reported in November. This reading indicates the fastest supplier delivery performance in 165 months (March 2009).

The Inventories Index registered 51.8 percent in December, 0.9 percentage point higher than the 50.9 percent reported for November, indicating Manufacturing inventories expanded at a faster rate compared to November.

ISM’s Backlog of Orders Index registered 41.4 percent in December, a 1.4-percentage point increase compared to November’s reading of 40 percent, indicating order backlogs contracted for the third consecutive month after a 27-month period of expansion.

The two manufacturing industries that reported growth in December are: Primary Metals; and Petroleum & Coal Products. The 13 industries reporting contraction in December, in the following order, are: Wood Products; Fabricated Metal Products; Chemical Products; Paper Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Apparel, Leather & Allied Products; Computer & Electronic Products; Machinery; Food, Beverage & Tobacco Products; Transportation Equipment; and Miscellaneous Manufacturing.


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