A newly released report from the Institute of Supply Management showed the PMI index registered 54.1 percent for January. That’s an increase of 1 percentage point when compared to December's seasonally adjusted reading of 53.1 percent.1 What’s more, the uptick in the PMI Index shows the overall economy grew for the 32nd consecutive month.
“The past relationship between the PMI and the overall economy indicates that the PMI for January corresponds to a 3.9-percent increase in real gross domestic product (GDP) on an annualized basis,” said Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. “Manufacturing is starting out the year on a positive note.”
Of the 18 manufacturing industries included in the survey, nine reported growth in January, in the following order: apparel, leather & allied products; petroleum & coal products; machinery; computer & electronic products; transportation equipment; miscellaneous manufacturing; fabricated metal products; paper products; and primary metals. Within the fabricated metal products category, survey respondents summarized that “the economy seems to be slowly improving,” while survey respondents covering the fields of computers & electronic products observed: “business lost to offshore is coming back.” Finally, in the category of primary metals, survey participants said, “business remains strong, and order intake is great—more than 20 percent above budget.”
Even more telling, Holcomb noted, improvement in the “new orders” index, which increased 2.8 percentage points from December’s seasonally adjusted reading to 57.6 percent. This marks the 33rd consecutive month of growth in new orders. The nine industries reporting growth in new orders in January (listed in order) are as follows: petroleum & coal products; machinery; apparel, leather & allied products; primary metals; computer & electronic products; fabricated metal products; transportation equipment; paper products; and food, beverage & tobacco products.
The complete January PMI report is available online.
- A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates contraction.