WASHINGTON D.C.: Based on a range of measurements, US manufacturing could have entered a recession in the fourth quarter of 2022, in line with a global decline in industrial output creating slack in commodity markets.
In both November and December, the Institute for Supply Management's manufacturing purchasing managers' index fell below 50 points, which is the threshold dividing expansion from contraction.
The Federal Reserve's manufacturing production index declined in the same two months, with output down 0.4 percent at the end of 2022, compared with 2021.
In the three months ending in December 2022, producer price inflation for goods other than food and energy slowed to an annualized 4.2 percent from 11.5 percent in the three months ending in April 2022.
In the three months ending in December, manufacturing payrolls increased at an annualized 1.6 percent, down from an annualized 5.5 percent growth in the three months ending in April.
In November, container freight processed through the nine largest US ports slowed to 2.49 million twenty-foot equivalent units (TEUs) from 2.81 million in the same month a year earlier.
The most recent Association of American Railroads weekly data showed that containerized freight volumes were down 9 percent in the first two weeks of 2023 compared with the same period in 2022.
The manufacturing weakness in the US, Europe and China explains the slump in a broad range of commodity prices towards the end of 2022.
As real incomes continue to decline and interest rates increase, the downturn will likely worsen over the next few months, note experts.