U.S. ISM Manufacturing Index Declines in January
by:Tom Moeller
|in:Economy in Brief
Summary
- Drop is to lowest level since recession.
- Component declines are broad-based.
- Pricing power improves.
The ISM U.S. manufacturing index declined to 47.4 in January from 48.4 in December and 49.0 in November, according to the Institute for Supply Management. The latest reading compares to the peak of 63.8 in March 2021 and stands at the lowest level since May 2020. The Action Economics Forecast Survey expected 48.0 for January.
Weakness in the index was led by a decline in the new orders index to 42.5 from 45.1 in November, the sixth month in the last seven below the break-even level of 50. A lessened 15.4% (NSA) of respondents reported higher new orders in January while a higher 34.3% reported a decline. The production index eased to 48.0 last month from 48.6, remaining well below its high of 67.0 in March 2021. January’s inventory index fell to 50.2 from 52.3. Offsetting these declines, the supplier delivery index edged higher to 45.6 but is down over 40% from its high almost two years ago, indicating much faster product delivery speeds.
The employment index eased to 50.6 in January from 50.8 in December. A lessened 15.2% (NSA) of respondents reported higher employment last month while a slightly increased 17.0% reported less hiring.
The prices index rose to 44.5 (NSA) in January from 39.4 in December. It stands well below its high of 92.1 in June of 2021. A higher 18.2% (NSA) of respondents reported higher prices while a lessened 29.3% reported price declines.
In other ISM series, the new export orders index rose to 49.4 in January from 46.2 November. It remained down, however, from its recent high of 57.1 in February 2022. The imports index increased to 47.8 in January, but it is likewise off its high of 61.0 in June 2021. The order backlog index rose to 43.4 from 41.4.
The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver's AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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