Manufacturing expansion eased in January paced by new orders and production, the Institute for Supply Management said today.The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, reached 57.6 percent last month, a dip from 58.8 percent in December. January was the third consecutive month where the PMI dropped.
The January index reading was the lowest since November 2020 when it registered at 57.3 percent.
“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said in a statement.
The PMI is based on a survey of executives in 18 industries. An index reading above 50 percent indicates economic growth, below 50 percent indicates contraction.
Fourteen industries reported expansion in January, including miscellaneous manufacturing, transportation equipment, primary metals, and fabricated metal products. Only one industry, paper products, reported economic contraction.
The PMI has been in positive territory for 20 consecutive months. The index has averaged 60.5 percent in the past 12 months.
ISM’s New Orders Index fell to 57.9 percent in January, down from 61 percent the month before. Eleven industries reported a gain in orders. Two industries, textile mills and petroleum & coal products, reported a decline in new orders.
The group’s Production Index declined to 57.8 percent last month from 59.4 percent in December. Ten industries reported increases in production while three reported a decrease.
Fiore said on a conference call that production was held back by absenteeism caused by COVID-19 and the Omicron variant.
ISM’s Employment Index improved to 54.5 percent in January from 53.9 percent in December. The group said nine industries reported employment gains while five reported job losses.
The PMI is viewed as a leading economic indicator and a barometer of where the manufacturing economy is headed.
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