WASHINGTON (Reuters] – Although U.S. manufacturing activity slowed by a year in December to a low of 11%, there are some signs that the supply constraint on labor and raw materials at factories is starting to ease.

IHS Markit data firm stated on Thursday that flash manufacturing PMI was down to 57.8 by mid-December, from 58.3 last November. This was the lowest reading since December 2020. The manufacturing sector accounts for 12 percent of the economy and a reading higher than 50 means that there has been an expansion. According to economists, the flash PMI would rise to 58.5.

The strong demand for goods continues to drive manufacturing and businesses have extremely low inventories. The COVID-19 pandemic has strained supply chain and is a problem.

But there is hope. According to the survey, “supply chain delays slowed down in the month” and “the pace of job creation increased at the fastest rate since June.” The survey also found that cost inflation had slowed to its slowest pace in seven months.

However, the services industry was not immune to shortages. Flash services sector PMI in the survey fell to 57.5, from 58.0 November. Reuters polled economists and predicted a reading 58.5 in the sector’s services sector. This account accounts for over two-thirds U.S. economy activity.

An index of the prices paid by services industry inputs rose to 77.3 in December, the highest reading since 2009. It had been 75.7 in November. This could indicate that inflation may remain high for some time. On a year-on–year basis, November saw the largest increase in consumer prices since 1982.

Overall business activity declined this month due to slowing activity in both the manufacturing and service sectors. According to the survey, flash Composite PMI output index fell from 57.2 in November to 56.9.

This was the highest reading since 2009, when it measured input prices at 78.1. This was the highest reading of the series since 2009, when it began. It followed 77.6 November.