U.S. ISM Manufacturing Index Strengthens in January; Prices Rise
by:Tom Moeller
|in:Economy in Brief
Summary
- Reading improves to highest level in over two years.
- New orders, production and employment rise.
- Prices reading jumps to highest level since last May.
The ISM Purchasing Managers Index of activity in the manufacturing sector rose to 50.9 during January from 49.2 in December. It was the first reading above the break-even level of 50 since October 2022, up from a low of 46.9 in October. A level of 49.7 had been expected by the Action Economics Forecast Survey. The series reached a monthly high of 63.8 in March 2021. The data were revised due to new seasonal adjustment factors.
Performance amongst the component indexes was mixed last month. The new orders index surged to 55.1 from 52.1 in December to the highest level since May 2022. An increased 26.3% (NSA) of respondents reported higher orders while a lessened 20.0% indicated declines. The January production index surged to 52.5, a ten-month high, after rising to 49.9 in December. An increased 19.4% (NSA) of respondents reported higher production while a lessened 18.5% reported lower. The employment index rose to 50.3, the first reding above break-even since May, from 45.4 in December. An increased 11.7% (NSA) of respondents reported more hiring while a reduced 13.2% indicated less. The supplier delivery index rose to 50.9 last month from December’s 50.1, after hitting a high of 52.6 in July. Working lower, the inventories reading declined to 45.9 last month from 48.4 in December, both below a high of 50.2 in August.
The prices index, which is not part of the composite series, rose to 54.9 (NSA) in January after increasing to 52.5 in December from 50.3 in November. It was the highest level in eight months and up from a September low of 48.3. An increased 20.7% of respondents reported higher prices last month while a greater 11.0% reported lower prices. The latest prices reading remained below a 60.9 high in April.
In other series, the export orders index rose to 52.4 in January, the highest level since July 2022, up from 50.0 in December. The imports index rose to 51.1 from 49.7 in December, the highest level since May, while the order backlog index fell to 44.9 (NSA) last month from a nine-month high of 45.9 in December.
The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. 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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