For the first time in over two years, U.S. manufacturing is back in expansion mode, according to the the latest Manufacturing ISM Report On Business. This marks a critical turning point for the sector, which had endured 26 consecutive months of contraction.
- The Manufacturing Purchasing Managers’ Index (PMI) registered 50.9% in January, marking a 1.7 percentage point increase from December and reaching its highest level since September 2022.
- The broader economy, meanwhile, continued its steady growth, now in its 57th consecutive month of expansion following a brief downturn in April 2020 at the height of the pandemic-induced recession.
Breaking It Down: The January report highlighted several key indicators pointing to an improving manufacturing landscape, The New Orders Index climbed to 55.1, up from 52.1 in December—its highest level since May 2022. This uptick suggests that demand for manufactured goods is picking up, a positive sign for future production levels.
- Employment Index: Jumped to 50.3, up from 45.4 in December. This is only the second time in the past year that the index has risen above the 50-point threshold, signaling an increase in manufacturing employment.
- Production and Inputs: Output expanded while supply chains remained accommodative, supporting continued growth.
What They’re Saying: Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, underscored the significance of January’s data: “U.S. manufacturing activity expanded in January after 26 consecutive months of contraction. Demand clearly improved, while output expanded and inputs remained accommodative.”
Bottom Line: While challenges remain—such as geopolitical uncertainties and inflationary pressures—January’s data offers optimism for continued growth in 2025. With demand rebounding and employment inching upward, U.S. manufacturing appears to be on a solid path toward growth after a prolonged downturn.
