ISM manufacturing PMI fell to 47.9 in December 2025, extending a long factory slump as tariffs and costs stayed high. Reuters
ISM manufacturing PMI hits a new low
The ISM manufacturing PMI dropped to 47.9 in December 2025, down from 48.2 in November. The reading was the weakest since October 2024, Reuters reported. Reuters
The ISM manufacturing PMI has now stayed below 50 for 10 straight months. A level under 50 signals contraction in manufacturing activity. Reuters
Investors also tracked the consensus forecast going into the release. Investing.com listed an estimate of 48.3, which the ISM manufacturing PMI missed. Investing.com
ISM framed the economy-wide signal as less dire than the factory signal. The group has said a PMI above 42.3, over time, aligns with overall economic expansion. Reuters +1
Tariffs and costs keep pressure on factories
Much of the renewed focus is on trade policy and pass-through costs. Reuters reported that companies continued to cite tariffs as a problem in respondent comments. Reuters
The ISM manufacturing PMI release landed amid debate about how tariffs change demand. Reuters said estimates put the average tariff near 17%, up from under 3% a year earlier. Reuters
Input prices stayed elevated in the survey, a key inflation signal. Reuters reported the prices paid index held at 58.5, above forecasts in the Reuters survey. Reuters
The official ISM release also listed Prices at 58.5, showing broad reports of higher raw material costs. go.weareism.org +1
What the sub-indexes say about demand
The ISM manufacturing PMI is a composite, but the details show where the strain sits. The new orders index registered 47.7, the ISM release said. PR Newswire +1
That matters because new orders often lead production and hiring. Reuters said new orders marked a fourth straight month of falling demand. Reuters
Production held slightly in expansion, but it did not signal a rebound. The ISM release put the production index at 51.0. PR Newswire +1
Labor remained a weak spot, consistent with a cautious outlook. Reuters reported factory employment declined for an 11th straight month. Reuters
The ISM report’s Employment Index printed at 44.9, well below 50. go.weareism.org
ISM manufacturing PMI also showed growth in only a narrow set of industries. Reuters said electrical equipment and computer/electronic products were the only two industries reporting growth. Reuters
Market and Fed implications for early 2026
ISM manufacturing PMI sits at the intersection of growth and inflation. A weak factory print supports the view that goods demand is soft. Yet a high prices index warns that cost pressure persists.
That mix can complicate interest-rate expectations. If the ISM manufacturing PMI stays low while prices remain elevated, policymakers face a harder trade-off. Investors then look for confirmation in jobs and inflation data.
Economists quoted by Reuters emphasized uncertainty around the strength of any rebound. Wells Fargo’s Shannon Grein cautioned on the extent of recovery in traditional capital-expenditure categories. Reuters
Other forecasters highlighted the role of future tariff carve-outs and deals. Reuters quoted Santander U.S. Capital Markets chief economist Stephen Stanley saying more exemptions could follow, but the factory “malaise” may persist. Reuters
What to watch next
Three near-term signals can confirm whether the ISM manufacturing PMI is bottoming:
New orders: sustained improvement above 50 would be the cleanest turn.
Prices paid: a drop from the high-50s would ease inflation anxiety.
Employment: less contraction would suggest firms expect steadier demand.
The next official update is already on the calendar. The ISM release said the January 2026 report is scheduled for February 2, 2026, at 10:00 a.m. ET. PR Newswire