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U.S. Manufacturing Slipped in December

FILE: Line workers smooth out the metal along the door frames on the flex line at Nissan Motor Co's automobile manufacturing plant in Smyrna, Tennessee, U.S., August 23, 2018.

US manufacturing activity contracted for a second month in December, remaining at the lowest levels since May 2020 as new orders and production slipped, survey data showed Wednesday.

The Institute for Supply Management's (ISM) manufacturing index dipped 0.6 points to 48.4 percent in December, according to data released Wednesday.

This was similar to analyst expectations, and the reading remains firmly below the 50 percent threshold indicating growth.

The manufacturing Purchasing Managers Index also remains at its lowest level since the coronavirus pandemic recovery began, said ISM manufacturing survey chair Timothy Fiore in a statement.

For now, ISM's Fiore said with respondents "reporting softening new order rates over the previous seven months," December's index reflects that companies are slowing their output.

The new orders index remains weak, data showed, and the production index fell into contraction.

The latest reading "offers more evidence that the days of heady growth are behind us," said economist Oren Klachkin of Oxford Economics, adding that a pandemic-driven hot streak in manufacturing ends this year.

"Tighter financial conditions and a weaker labor market will cramp domestic goods demand, and the strong greenback and soft external demand will weigh down exports," he added.

"Customer demand continues to be depressed," according to a survey respondent in the chemical products sector.

"While 2023 pipeline is looking very positive, current demand is significantly down," the firm added.

While supplier deliveries has improved, "companies continue to judiciously manage hiring," Fiore added.