U.S. manufacturing slowed more than economists had expected in December, though it remained on a healthy pace to close out the year.
The drop, nevertheless, helped to cut short an early morning stock market rally on year's first day of trading.
Inventories fell and growth in new orders cooled last month, the Institute for Supply Management said Friday. The group’s purchasing managers index dropped to a 55.5 level last month, the lowest since June and down 3.2 percentage points from November.
Any reading above 50 indicates expansion. Economists had expected manufacturing to slow, but only to a level of 57.5, according to FactSet.
Some survey respondents reported that congestion problems plaguing West Coast ports hurt growth, as shipments from Asia were delayed.
Despite the slowdown, U.S. manufacturing ended the year in positive territory.
Eleven out of the 18 manufacturing industries surveyed reported growth in December, including printing and related support activities, and fabricated metal products.
The institute's employment index also grew to 56.8 last month from 54.9 in November, suggesting employers added jobs at year's end.
Stocks jumped after the opening bell, but fell after the ISM report. The Dow Jones industrial average gained 128 points in early trading but fell after the report was released. The index was down more than 50 points at 10:20 a.m. PST Friday.
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