Manufacturing Index Slows

The manufacturing PMI has been consistently running warmer than other manufacturing surveys which helps put into context the disappointment of December's slowing to 51.2, down from 52.8 in November. The final reading for December is 1 tenth lower than the mid-month flash. Near stagnation in new orders is a key negative in the report, one that points to further slowing for the headline index in coming readings. Orders are still growing but at their slowest pace of the recovery, since September 2009. Backlog orders are contracting sharply, the most since September 2009 as well. The report points to widespread weakness across orders including for export orders where manufacturers continue to site strength in the dollar as a negative.

Among other readings, production is flat, pre-production inventories are down, but hiring, at least for now, is still strong. Price data show continued contraction for inputs, the result of low oil and commodity prices, but a third month of gains for finished prices which is one of the few pluses in this report. Up next at 10:00 a.m. ET on the calendar will be the very closely watched ISM manufacturing report.