Key Facts
• On January 5, 2026, the U.S. Institute for Supply Management (ISM) reported December’s Manufacturing Purchasing Managers’ Index (PMI) at 47.9.
• This marks the lowest PMI since October 2024 and a decline from November’s 48.2, defying expectations of stability.
• The PMI has remained below the 50 expansion-contraction threshold for 10 consecutive months.
• Average tariff rates rose to nearly 17%, continuing the impact of Trump-era tariffs.
• December saw declines in both production and inventory indices after prior improvements.
• New orders index dropped to 47.7 from 47.4, indicating a 4-month continuous demand decrease.
• The new orders index has been below 50 for 10 of the past 11 months, reflecting tariff-driven price pressures.
• Factory input costs remain high; the prices paid index held steady at 58.5.
• Employment index fell below 50 for the 11th consecutive month amid weak demand.
• ISM notes PMI remains above 42.3, consistent with long-term economic expansion.
• Economists highlight ongoing economic uncertainty and cautious corporate capital investment despite some tax advantages.
Summary
The U.S. ISM Manufacturing PMI for December 2025 declined to 47.9, the lowest level in over a year, signaling continued contraction in the manufacturing sector. Persistent effects of elevated tariffs, averaging nearly 17%, have suppressed new orders and increased input costs. Key sub-indices such as production, inventory, and employment also weakened, reflecting economic uncertainty. Despite some corporate tax improvements, cautious capital investment persists. The PMI remains above 42.3, aligning with long-term economic growth trends, but the manufacturing outlook remains subdued amid tariff-driven price pressures and demand softness. This data underscores ongoing challenges for U.S. manufacturing in early 2026.
