After 26 consecutive months of contraction, economic activity in the manufacturing sector expanded, according to the latest Manufacturing ISM Report On Business, released on February 4.
The Manufacturing PMI registered 50.9% in January, 1.7 percentage points higher compared to the seasonally adjusted 49.% recorded in December.
The overall economy continued in expansion for the 57th month after one month of contraction in April 2020.
"Demand and production improved; and employment expanded,” said Timothy R. Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee, in a statement. “However, staff reductions continued with many companies, but at weaker rates. Prices growth was moderate, indicating that further growth will put additional pressure on prices. As predicted, maintaining a slower rate of price increases as demand returns will be a major challenge for 2025.”
The Index reports are as follows:
The Supplier Deliveries Index indicated marginally slower deliveries, registering 50.9%, 0.8 percentage point higher than the 50.1% recorded in December.
The Inventories Index registered 45.9%, down 2.5 percentage points compared to December’s seasonally adjusted reading of 48.4%.
The New Orders Index was in expansion territory for the third month after seven months of contraction, strengthening again to a reading of 55.1%, 3 percentage points higher than the seasonally adjusted 52.1% recorded in December.
The Production Index registered 52.5% which is 2.6 percentage points higher than December’s seasonally adjusted figure of 49.9%.
The Prices Index continued in expansion territory, registering 54.9%, up 2.4 percentage points compared to the reading of 52.5% in December.
The Backlog of Orders Index registered 44.9%, down 1 percentage point compared to the 45.9% recorded in December.
The Employment Index registered 50.3%, up 4.9 percentage points from December’s seasonally adjusted figure of 45.4%.
The New Export Orders Index reading of 52.4% is 2.4 percentage points higher than the ‘unchanged’ reading of 50% registered in December.
The Imports Index returned to expansion in January, registering 51.1%, 1.4 percentage points higher than December’s reading of 49.7%.
What Respondents are Saying:
- “Customer orders slightly stronger than expected. Seeing more general price increases for chemicals/raw materials. No International Longshoremen’s Association strike is a tremendous help.” [Chemical Products]
- “Alleviating supply chain conditions are noticeably pivoting back into acute shortage situations, with headwinds following. For aerospace and defense companies, critical minerals supply chains are tightening dramatically due to Chinese restrictions. Concerns are growing of an environment of more supply chain shortages.” [Transportation Equipment]
- “As the U.S. administration transfers, we will continue to monitor impact of tariffs on materials used for manufacturing. China stimulus is helping us win orders and increase use of services and consumables. Cost pressures remain for all materials and parts but are starting to stabilize.” [Computer & Electronic Products]
- “Volume in 2025 is targeting 2-percent growth. The organization is mindful of potential tariffs and what to do with re-routing or cost increases in supply chains that are impacted.” [Food, Beverage & Tobacco Products]
- “Although we are in our busy season, our demand for the first two weeks of 2025 has outpaced normal levels for this period of time.” [Machinery]
- “Business is slowly improving.” [Electrical Equipment, Appliances & Components]
- “Capital equipment sales are starting 2025 off strong. Normally, we see a soft start to the year, so this strong start is unusual.” [Fabricated Metal Products]
- “New orders are still good but decreasing compared to previous quarters. Working through current backlog.” [Miscellaneous Manufacturing]
- “Automotive order demand continues to be consistent and on a steady pace. Beginning to look at hiring additional team members once again. Pricing is holding firm. Having to work overtime to cover plant inefficiency to date.” [Primary Metals]
- “Looking forward to a year of strong customer demand and higher sales than 2024.” [Textile Mills]