On 5/1, the Institute for Supply Management (ISM) announced that the country's Purchasing Managers' Index (PMI) reached only 47,9 points in december. This marks the lowest level since october 2024. A PMI below 50 indicates a contraction in manufacturing activity. This index has remained below the 50-point mark for the past 10 months, despite manufacturing contributing 10,1% to US GDP.

Two sectors, electrical equipment - appliances - components and computers - electronics, recorded growth. The remaining 15 sectors, including chemicals, machinery, and transport equipment, all experienced contraction.

Workers at a combine harvester factory in Mendota, Illinois on 21/2. Photo: Reuters

Sub-indices for production and inventory both decreased last month, even after showing improvement in november. Meanwhile, factory input costs remained high. The input prices index was unchanged from november, standing at 58,5 points, which was higher than the forecast of 57. The new orders index also remained largely stable at 47,7 points.

Despite these figures, the PMI index is still above 42,3, a threshold ISM considers consistent with an expanding economy.

The ISM report indicates that a short-term recovery is unlikely. However, economists anticipate a turning point this year, as US President Donald Trump's tax cuts are expected to take effect.

Survey participants continue to identify import tariffs as a problem. Some chemical companies expressed hope for a "return to free trade". Nevertheless, President Trump has consistently maintained that import tariffs are generating hundreds of billions of USD for the budget, while also enhancing US economic security.

However, apart from sectors boosted by the AI investment boom, Trump's import tariffs have not revived domestic manufacturing as anticipated. Economists suggest this goal is unattainable, as tariffs cannot resolve the industry's fundamental issues, such as labor shortages.

Ha Thu (according to Reuters)