US ISM manufacturing index dropped to 48.2 in December, which marks second month of outright contraction in national manufacturing activity. 

This release was below consensus expectations of 49.0. This report, which is weaker than expected, is in line with the view that the US manufacturing sector is likely to trend slightly negative for some time as manufacturing continues to adjust to the strength in USD. 

"The report also indicates an outright decline in manufacturing employment in December, with the employment index falling to 48.1 (previous: 51.3). The ongoing decline in the inventories (43.5, previous: 43.0) may signal a substantial drag from inventories in the fourth quarter", says Barclays in a research note.