Analyst: Although manufacturers continued to increase production in December, the outlook for the United States at the beginning of the year is less optimistic.
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According to Golden Ten Data on January 2, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that although manufacturers continued to increase output in December—indicating that the goods production sector will contribute to further robust economic growth in the fourth quarter—the outlook for early 2026 appears less optimistic. In fact, the gap between production growth and declining orders is the largest since the 2008-2009 global financial crisis. Unless demand improves, the current level of factory output is clearly unsustainable. If production capacity has to be scaled back, employment will also be adversely affected. A key factor raising concerns about sales is the extent to which producers will have to pass on higher costs to consumers in the form of price increases, with rising costs still mainly attributed to tariffs. Input cost inflation slowed in December to its lowest level since January last year, which is somewhat encouraging. However, despite this cost trend suggesting that the impact of tariffs on inflation peaked as early as the summer, costs are still rising month by month at a relatively high rate, indicating that cost growth for U.S. businesses continues to outpace most other major economies' competitors.
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