U.S. manufacturing moved closer to recovery in December, with production rebounding and new orders rising further, but the outlook remains uncertain amid the threat of higher tariffs that could raise prices of imported raw materials.

PMI report showed a rebound in production and a rise in new orders, showing slower contraction in U.S. manufacturing activity.

The business activity in the US manufacturing sector continued to contract, albeit at a softening pace in December, with the ISM Manufacturing PMI rising to 49.3 from 48.4 in November. This reading came in better than the market expectation of 48.4.

The ISM (Institute for Supply Management) Manufacturing PMI contracted for the ninth consecutive month with a December reading of 49.3%. When compared to November ’s reading of 48.4%, the 0.9 percentage point increase indicates contraction at a slower rate.

U.S. manufacturing moved closer to recovery in December, with production rebounding and new orders rising further, though factories faced higher prices for inputs as the year ended. The Institute for Supply Management (ISM) said on Friday that its manufacturing PMI increased to 49.

The seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) fell to an 11-month low of 47.0 in December, down from 48.0 in November and below the earlier flash estimate of 47.

The rate of expansion in new orders was the slowest in the year, suggesting weaker growth in future production.