By Xavier Fontdegloria
The U.S. manufacturing sector contracted in December at the steepest pace since the onset of the Covid-19 pandemic as demand remained subdued and production weakened, data from a purchasing managers survey showed Tuesday.
The S&P Global U.S. manufacturing PMI decreased to 46.2 in December from 47.7 in November, posting the lowest reading since the initial Covid-19 lockdown period in May 2020 and unchanged from the preliminary reading.
The index suggests factory activity shrank in December for a second consecutive month as any reading below 50.0 indicates contraction.
The contraction in activity was led by faster downturns in output and new orders, and companies attributed weak client demand to increasing economic uncertainty and high inflation, the report said.
“The manufacturing sector posted a weak performance as 2022 was brought to a close,” said Sian Jones, senior economist at S&P Global.
Concerns about the economic outlook turned firms more cautious in terms of hiring, and December saw job creation increasing only slightly and largely linked to skilled hires, she said.
Weaker activity at year-end led to easing price pressures, according to the survey. Both input and output inflation moderated at factory gates, and supply-chain bottlenecks were less apparent than earlier in the year.
“Slower upticks in inflation signal the impact of Federal Reserve policy on prices, but growing uncertainty and tumbling demand suggest challenges for manufacturers will roll over into the new year,” Ms. Jones said.
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