(Reuters) - A reading of manufacturing activity in the U.S. Mid-Atlantic region fell to its lowest level in two years in December, with both new orders and shipments falling, suggesting the manufacturing sector remains in recession.

The Federal Reserve Bank of Philadelphia said on Thursday that its monthly manufacturing index was at a negative 5.5 in November, the lowest since April 2023, the lowest reading since April 2023. decreased to negative 16.4. The average forecast among economists polled by Reuters was 3.0. Negative values ​​indicate contraction of activity.

The report's new orders index fell to 4.3, the lowest since May, from a plus of 8.9 in November.

Factory managers remained optimistic about the outlook for the six-month period, but their growth outlook softened in November from a three-year high.

The manufacturing sector, which makes up more than 10 percent of the economy, continues to struggle to find its footing as the Federal Reserve raises interest rates in 2022 and 2023, according to a regional report from the Philly Fed. In the latter half of this year, interest rate cuts are not likely to ease further, and market-based measures of borrowing costs remain significantly higher. Compared to the beginning of 2022, investment continues to be under pressure.

On Tuesday, the Fed reported that manufacturing output rose less than the previous month in November, with output falling 1.0% from a year earlier.

In addition, US President-elect Donald Trump's willingness to impose new tariffs on foreign imports could trigger tariffs on American exports by US trading partners.

(Reporting by Dan Burns; Editing by Chizu Nomiyama)