Manufacturing growth in the U.S. slightly slowed in December 2019 although the sector still ended the year with its strongest average quarterly performance since the first quarter, according to latest survey data from IHS Markit.
The seasonally adjusted U.S. Manufacturing Purchasing Managers' Index registered a final reading of 52.4 for December 2019, edging down from 52.6 in the previous month. An index reading above 50 denotes a monthly expansion.
The consensus estimate of economists polled by Econoday was for an index reading of 52.5.
Despite a decrease from the prior month's level, the latest PMI data signaled a "modest" improvement in the health of the U.S. manufacturing sector, according to IHS Markit.
"The overall rate of expansion nevertheless faltered somewhat in December and remains well below that seen this time last year, suggesting producers are starting 2020 on a softer footing than they had enjoyed heading into 2019," said Chris Williamson, chief business economist at IHS Markit.
Output growth "softened" in December 2019 from a 10-month high in the previous month, with the "moderate" expansion supported by greater client demand and an increase in new order volumes.
IHS Markit said December 2019 saw the second-strongest improvement in new orders since April 2019, while new export orders experienced its third straight monthly upturn. Greater production requirements led manufacturers to hire more workers, driving employment growth to its second-fastest since May 2019.
Business confidence among manufacturing companies in relation to production growth in the year ahead was "relatively muted," but improved month over month in December 2019 on the back of new product development, new clients and capital investments.
Williamson said continuing market anxieties regarding geopolitics, trade wars and the impact of tariffs on businesses, as well as the 2020 presidential elections in the U.S. weighed on business sentiment.