US manufacturing’s contraction eased in December, according to the ISM Manufacturing Index. The survey-based indicator rose to 49.3 last month, the highest since March. Despite the improvement, the index remains below the neutral 50 mark and has reflected contraction for 25 of the past 26 months. Meanwhile, analysts at ING advise that “US manufacturing shows encouraging signs of life… after languishing for much of the past two years.”
The US 30-year Treasury yield rises to 14-month high ahead of a new round of government debt sales this week. “A hawkish Fed December meeting and concerns over the US fiscal picture have led to an upward pressure on rates,” says Mohit Kumar, chief economist at Jefferies International.
Two Federal Reserve policymakers highlight the delicate dance between mainintain a robust labor market while at the same time recognizing that the central bank’s efforts on taming inflation is not yet done. “We are fully aware that we are not there yet – no one is popping champagne anywhere,” says Fed Governor Adriana Kugler. “And at the same time … we want the unemployment rate to stay where it is” and not increase rapidly.” San Francisco Fed President Mary Daly says: “”At this point, I would not want to see further slowing in the labor market — maybe gradually moving around in bumps and chunks on a given month, but certainly not additional slowing in the labor market.”
Eurozone economy contracts slightly in December, based on PMI survey data. The HCOB Eurozone Composite PMI Output Index, a GDP proxy, rose to 49.6, just below the neutral 50 mark that separates growth from contraction.
China’s services activity expanded at the fastest pace in seven months in December, based on PMI survey data. The Caixin/S&P Global services purchasing managers’ index (PMI) rose to 52.2 last month, the highest since May 2024. A reading above the neutral 50 mark indicates growth.
US Q4 GDP is on track to rise 2.4%, according to the latest update of the Atlanta Fed’s GDPNow model. If correct, the increase will mark a slowdown from Q3’s strong 3.1% advance.
