Markit Economics released its preliminary manufacturing purchasing managers' index (PMI) for the U.S. on Wednesday. The U.S. preliminary manufacturing purchasing managers' index (PMI) dropped to 51.3 in December from 52.8 in November, missing expectations for a decline to 52.6. It was the lowest level since October 2012.

A reading above 50 indicates expansion in economic activity.

The decline was partly driven by a slower pace of expansion in new orders and production volumes. New orders grew at weakest pace weakest since September 2009, while production volumes rose at softest pace since October 2013.

"Just as the Fed looks set to hike interest rates for the first time since 2006, the manufacturing sector shows signs of stalling. The flash PMI results show factories ending the year with the weakest inflow of new orders since the global financial crisis," Markit Chief Economist Chris Williamson.

"Low oil prices are hurting the energy sector, feeding through to reduced investment demand for plant and machinery, while the stronger dollar is hitting exports and encouraging import substitution. These are major headwinds that show no sign of easing any time soon," he added.