Jan 3, 2020 - Economy & Business

U.S. manufacturing activity hits worst level since 2009

Worker operates a Swiss screw machine (also known at an automated lathe) at Makerite Manufacturing on October 07, 2019 in Roscoe, Illinois
Photo: Scott Olson/Getty Images

The Institute of Supply Management's index of manufacturing activity released Friday hit its lowest level since the end of the Great Recession in December.

Why it matters: It shows worsening conditions for the U.S. manufacturing sector, which has been in contraction for five straight months, and reignites concerns about the trade war's impact on the economy. Stocks, already in the red after a U.S. airstrike killed a top Iranian general, fell near the lowest levels of the day following the release of the data.

By the numbers: The index came in at 47.2 in December — worse than the 49 economists expected — falling 0.9 points from the prior month's reading. (Any reading below 50 suggests the manufacturing sector is in contraction.)

  • Respondents to the survey, which manufacture goods in 18 different industries, noted sluggish demand for products, as well as suppliers passing tariff-related costs on to manufacturers.

The bottom line: "Global trade remains the most significant cross-industry issue, but there are signs that several industry sectors will improve as a result of the phase-one trade agreement between the U.S. and China," ISM chair Timothy Fiore said in a statement.

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