The J.P. Morgan Global Manufacturing PMI expanded for the second straight month, albeit only marginally, at 50.1 in December. More importantly, it sustained progress in the sector following six consecutive months of contraction.

Half of the top 12 markets for U.S.-manufactured goods contracted in December, down from seven in November. However, nine of these markets had lower PMI readings in December than in November. As a result, while global manufacturing activity has stabilized somewhat in the past few months, the sector remains weaker than desired.

Manufacturing employment fell by 12,000 workers in December, dropping for the second time in the past three months. In 2019, manufacturers added roughly 3,800 workers per month on average, compared to the average of 22,000 manufacturing workers created each month in 2018.

While the manufacturing sector has steadied somewhat recently, it remains weaker than desired as firms continue to grapple with slowing global growth and trade uncertainties. Eleven of the 19 major manufacturing sectors experienced reduced hiring in December. Average hourly earnings for production and nonsupervisory workers in manufacturing rose 2.8% year-over-year.

How the tariffs are set to change:

“In exchange for China’s purchasing commitments, the Trump administration will cancel new tariffs on roughly $156 billion in Chinese imports that were set to take effect Dec. 15.”

“It has also agreed to cut in half the existing 15% tariff rate on roughly $120 billion of Chinese goods that had been imposed on Sept. 1. But tariffs will remain on roughly $360 billion of annual Chinese imports to the U.S., a majority of the Chinese goods sold in America.”

NAM President and CEO Jay Timmons appeared on CNBC early this morning to talk about the deal. He said:

“Manufacturers are extraordinarily pleased that we have been able to complete phase one [of the trade deal] . . . The good news for manufacturers is there’s a key priority that has been addressed and that is enforceable rules regarding intellectual property theft and holding China accountable.”

“We are very pleased about that; we are looking forward to phase two because there are a lot of other issues that still have to be addressed.”

The U.S. economy grew 2.1% at the annual rate in the fourth quarter. Global headwinds and trade uncertainties continued to have large impacts on the underlying data, with businesses hesitant to invest in their firms and sizable declines in exports and imports, especially the latter.

New durable goods orders rose 2.4% in December, bouncing back after falling 3.1% in November. With that said, the latest figures are boosted by very strong defense aircraft and parts orders. Excluding transportation equipment, new orders edged down by 0.1%.

New durable goods orders have fallen 3.7% over the past 12 months, with a decline of 1.0% with transportation equipment excluded. As such, durable goods manufacturers ended the year on another disappointing note. Core capital goods spending-a proxy for capital spending in the U.S. economy-decreased 0.9% in December, but on a year-over-year basis, this figure increased 0.9%.

Private manufacturing wages and salaries rose 0.7% in the fourth quarter, up from 0.6% in the third quarter. That translated into 3.2% growth over the past 12 months, the fastest year-over-year pace of growth since the first quarter of 2002, or in nearly 18 years.

Manufacturing production rose 0.2% in December, but, overall, the data continued to reflect weaknesses for the sector in 2019. Over the past 12 months, output has declined 1.3%, with year-over-year growth negative for six straight months to end the year. Looking at annual averages, manufacturing production declined 0.2% in 2019, pulling back from the 2.3% gain seen in 2018.

There have been some signs of stabilization in other data points, especially in global markets and considering recent trade developments. My forecast for manufacturing production growth in 2020 is 0.5%. Along those lines, surveys from the New York and Philadelphia Federal Reserve Banks found expanding activity in January, beginning the year on a positive note.

Total industrial production declined 0.3% in December. Utilities output fell 5.6%, largely because there was less spent on heating costs due to warmer temperatures, pulling the headline measure lower. Overall, industrial production fell 1.0% over the past 12 months, declining on a year-over-year basis for the fourth straight month.

Job openings in the manufacturing sector fell to just 388,000 in November, the slowest pace since December 2017. Nonetheless, manufacturing job postings remained elevated over much of 2019, averaging more than 472,000 per month year to date, including the all-time high reached in June (515,000). The overall labor market remains solid, even with softer net hiring, with job openings continuing to outpace unemployment by nearly one million.