U.S. Manufacturing Growth Continues To Slow In January

Growth in U.S. manufacturing activity continued to slow in the month of January, the Institute for Supply Management revealed in a report on Tuesday.

The ISM said its manufacturing PMI fell to 57.6 in January from a revised 58.8 in December, although a reading above 50 still indicates growth in the sector. The index decreased for the third straight month, slipping to its lowest level in over a year.

Economists had expected the manufacturing PMI to drop to 57.5 from the 58.7 originally reported for the previous month.

The continued decline by the headline index came as the new orders index slumped to 57.9 in January from 61.0 in December and the production index slid to 57.8 from 59.4.

On the other hand, the report said the employment index inched up to 54.5 in January from 53.9 in December, indicating a modest acceleration in the pace of job growth.

The prices index also surged up to 76.1 in January from 68.2 in December, suggesting price growth reaccelerated after a notable slowdown in the previous month.

Meanwhile, the ISM said the backlog of orders index tumbled to 56.4 from 62.8, while the inventories index fell to 53.2 from 54.6 and the supplier deliveries index edged down to 64.6 from 64.9.

“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, but January was the third straight month with indications of improvements in labor resources and supplier delivery performance,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

He added, “Still, there were shortages of critical intermediate materials, difficulties in transporting products and lack of direct labor on factory floors due to the COVID-19 omicron variant.”

On Thursday, the ISM is scheduled to release a separate report on activity in the service sector in the month of January. The services PMI is expected to drop to 58.7 in January from 62.0 in December.

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