Manufacturing Activity Contracts for 10th Consecutive Month to End 2025 on Low Note, ISM Says

12:47 PM EST, 01/05/2026 (MT Newswires) -- Economic activity in the US manufacturing sector contracted for a 10th straight month in December and reached its lowest reading of 2025, a survey by the Institute for Supply Management showed Monday.

The ISM purchasing managers' index fell to 47.9 last month from 48.2 in November. The consensus was for a 48.4 reading in a survey compiled by Bloomberg. A reading below 50 indicates the manufacturing sector is generally contracting.

The new orders index edged up to 47.7 from 47.4 sequentially, but remained in contraction for a fourth consecutive month, the ISM said. Production decreased to 51 from 51.4, while the employment index increased to 44.9 from 44, its 11th consecutive month of contraction. The prices gauge remained unchanged at 58.5 in December, according to the report.

"Companies continued to focus on accelerating staff reductions due to uncertain near- to mid-term demand," said Susan Spence, chair of the ISM's manufacturing business survey committee. "The main headcount management strategies remain layoffs and not filling open positions."

On Friday, S&P Global (SPGI) said US manufacturing output growth decelerated in December as new orders fell for the first time in a year, while firms' outlook waned slightly.

Higher prices and macro uncertainty continue to be the two "largest drags" on firms' sentiment in the manufacturing sector, Oxford Economics Senior US Economist Matthew Martin said in remarks e-mailed to MT Newswires Monday.

"Manufacturers hope 2026 proves to be the year of recovery, and there are signs to suggest this will come to fruition," Martin wrote. "Low customer inventories suggest stronger new orders in the future, while the lagged impact of a weaker dollar should buoy demand abroad."

Oxford expects a fiscal boost from US President Donald Trump's One Big Beautiful Bill Act, interest rate relief, and "fading uncertainty" to offer additional support to the sector over time, according to the note.

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