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US manufacturing sector eyes recovery in December; ISM PMI increased to 47.4
The Institute for Supply Management (ISM) said on Wednesday that its manufacturing PMI increased to 47.4 last month after being unchanged at 46.7 for two straight months, according to the Economic Times.
US ISM Manufacturing PMI rose to 47.4 in Dec-23 after remaining unchanged at 46.7 in the past 2 months and exceeded market expectations of 47.1. In terms of sub-sector, primary metals was the only industry to report an expansion in Dec-23. New orders fell sharper as the index declined to 47.1 (Nov-23: 48.3), remaining in contractionary territory for 16 consecutive months.
However, export orders improved, rising to 49.9 (Nov-23: 46.0) which is the highest reading in the 7-month contractionary sequence. Despite the softer demand conditions, production rebounded to expansionary territory at 50.3 (Nov-23: 48.5). As production expanded, hiring deterioration slowed as the employment improved to 48.1, the highest reading in 3 months.
Manufacturing inventories marked a steeper contraction at 44.3 (Nov-23: 44.8). Imports index stood at 46.4 (Nov-23: 46.2), a 14th consecutive month of contraction. Cost pressures eased further with sharper deflation reflected in the price index which fell further to 45.2 (Nov-23: 49.9), marking the 8th month of contraction.
The softer deterioration of the US manufacturing sector indicated the sign of stabilization in global demand and production activities, as seen in PMI reports for other countries. Meanwhile, the sustained decline in input costs for manufacturers pointed to easing price pressure in the US, further raising confidence for the Fed will start cutting its policy interest rate later this year.
“On that note, we foresee the rebound in external trade and narrowing FFR-OPR differential to be the main drivers for the ringgit to appreciate in 2024. Moreover, we foresee the improving global manufacturing and trade outlook will support Malaysia’s external trade recovery this year,” says MIDF.
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