US manufacturing activity contracted for a second straight month in December, hit by the sharp oil-sector slowdown and poor apparel sales, the Institute for Supply Management's survey showed Monday.
The ISM purchasing managers index for the manufacturing sector slipped to 48.2 from 48.6 in November, the second month in a row below 50 which marks the threshold between expansion and contraction.
"As was the case in November, 10 out of 18 manufacturing industries reported contraction in December. Contraction in new orders, production, employment and raw materials inventories accounted for the overall softness in December," said ISM survey official Bradley Holcomb.
Further losses in oil prices last month led to more cutbacks in hydrocarbon exploration activities, resulting in increased layoffs.
A survey respondent in the apparel sector said slowing sales in that industry had also led to job losses.
But respondents from other industries said lower costs for energy and other commodities were helping boost profit margins.
"Business is going well. Low fuel prices keep full-size SUV and truck sales at high volumes," said one respondent.
Jim O'Sullivan, US economist for High Frequency Economics, noted the ISM manufacturing index represents only a small part of the US economy.
"The economy as a whole is stronger than implied by these data alone," he said in a client note.
"Overall growth has been led by the much larger non-manufacturing sector... We expect the non-manufacturing index to remain well above 50 in this week's report for December."