ISM factory PMI improves despite disruptions from Red Sea attacks
By Alexander Bueso
Date: Thursday 01 Feb 2024
(Sharecast News) - Factory sector activity in the U.S. continued to contract in January, but at a slower pace, the results of a closely-followed survey showed.
The Institute for Supply Management's manufacturing sector Purchasing Managers' Index improved from a reading of 47.1 in December to 49.1 for January (consensus: 47.0)
A jump in the sub-index linked to new orders from 47.0 to 52.5 accounted for the bulk of the improvement.
In parallel, the sub-index tracking companies' levels of production edged up from 49.9 to 50.0.
The sub-index for prices rose sharply, climbing by 7.7 points to 52.9.
Linked to the above, respondents from the Chemical Products and Transportation Equipment Industry noted the impact on international freight prices from the disruptions in the Red Sea.
For the headline index and all the subindices the 50.0-point level marked the threshold separating an expansion from a contraction.
"The biggest improvement in January is in new orders, up 5.5 points to 52.5, and history suggests that the production and employment indexes will follow new orders higher in due course," said Kieran Clancy, senior U.S. economist at Pantheon Macroeconomics.
"In short, the manufacturing sector appears to be past the worst, but we see few signs of a raging rebound looming in the data; a gradual further uptrend in activity is a more reasonable bet."
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