ISM report show steep drop in manufacturing
Stocks respond with a new year's drop
Economic activity in the manufacturing sector failed to grow in December following 10 consecutive months of expansion, while the overall economy grew for the 74th consecutive month, according to the latest report from the Institute for Supply Management.
The PMI index used to track manufacturing growth dropped from 47.7%, a decrease of 3.1 percentage points when compared to November's reading of 50.8%. This is the first month that the manufacturing sector has failed to grow since January 2007. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.
The ISM report sent stocks tumbling more than 100 points in early trading on Jan. 2.
The report was issued by "The manufacturing sector failed to grow in December ending 10 consecutive months of growth. The recent trend has been toward slower growth,” said Norbert J. Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “However, December was apparently a very tough month as new orders, production and employment were all below the break-even mark of 50%. Industries close to the housing market appear to be struggling more than others, and those involved in exports seem to be doing better. Slower demand appears to be more of a problem than excessive inventories based on the respondents' comments."
More on the impact of the manufacturing decline can be found here .
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Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey