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Manufacturing PMI® at 49.1%; January 2024 Manufacturing ISM® Report On Business®New Orders Growing; Backlogs Contracting; Production Growing; Employment Contracting; Supplier Deliveries Faster; Raw Materials Inventories Contracting; Customers' Inventories Too Low; Prices Increasing; Exports Contracting and Imports Growing This report reflects the recently completed annual adjustments to the seasonal factors used to calculate the indexes. TEMPE, Ariz., Feb. 1, 2024 /PRNewswire/ -- Economic activity in the manufacturing sector contracted in January for the 15th consecutive month following one month of "unchanged" status (a PMI® reading of 50 percent) and 28 months of growth prior to that, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®. The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: "The Manufacturing PMI® registered 49.1 percent in January, up 2 percentage points from the seasonally adjusted 47.1 percent recorded in December. The overall economy continued in expansion for the 45th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index moved into expansion territory at 52.5 percent, 5.5 percentage points higher than the seasonally adjusted figure of 47 percent recorded in December. The January reading of the Production Index (50.4 percent) is 0.5 percentage point higher than December's seasonally adjusted figure of 49.9 percent. The Prices Index registered 52.9 percent, up 7.7 percentage points compared to the reading of 45.2 percent in December. The Backlog of Orders Index registered 44.7 percent, 0.6 percentage point lower than the 45.3 percent recorded in December. The Employment Index registered 47.1 percent, down 0.4 percentage point from December's seasonally adjusted figure of 47.5 percent. "The Supplier Deliveries Index figure of 49.1 percent is 2.1 percentage points higher than the 47 percent recorded in December. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) "The Inventories Index increased 2.3 percentage points to 46.2 percent from December's seasonally adjusted reading of 43.9 percent. The New Export Orders Index reading of 45.2 percent is 4.7 percentage points lower than December's figure of 49.9 percent. The Imports Index moved into expansion territory, registering 50.1 percent, 3.7 percentage points higher than the 46.4 percent reported in December." Fiore continues, "The U.S. manufacturing sector continued to contract, though at a marginal rate compared to December. Demand improved, output remained stable and inputs are accommodative. Demand moderated, with the (1) New Orders Index expanding at a respectable rate, (2) New Export Orders Index in a headwind and (3) Backlog of Orders Index remaining above 40 percent but still in fairly strong contraction territory at 44.7 percent. Also, the Customers' Inventories Index contracted further, becoming more accommodative for future production. On balance, Output (measured by the Production and Employment indexes) expanded slightly, with a combined 0.1-percentage point upward impact on the Manufacturing PMI® calculation. Panelists' companies maintained production levels month over month and continued head count reductions in January, with significant layoff activity. Inputs — defined as supplier deliveries, inventories, prices and imports — continued to accommodate future demand growth but are showing signs of stiffening. The Supplier Deliveries Index indicated faster deliveries for the 16th straight month, and the Inventories Index moved upward while remaining in moderate contraction territory. The Prices Index climbed into expansion (or 'increasing') territory as new pricing levels for 2024 went into effect. "Two of the six biggest manufacturing industries (Transportation Equipment; and Chemical Products) registered growth in January. "Demand remains soft but shows signs of improvement, and production execution is stable compared to December, as panelists' companies continue to manage outputs, material inputs and labor costs. Suppliers continue to have capacity. Sixty-two percent of manufacturing gross domestic product (GDP) contracted in January, down from 84 percent in December. More importantly, the share of sector GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 27 percent in January, compared to 48 percent in December, and 54 percent in November. Among the top six industries by contribution to manufacturing GDP in January, two (Machinery; and Computer & Electronic Products) had a PMI® at or below 45 percent, one fewer than in the previous month," says Fiore. The four manufacturing industries reporting growth in January are: Apparel, Leather & Allied Products; Textile Mills; Transportation Equipment; and Chemical Products. The 13 industries reporting contraction in January — in the following order — are: Wood Products; Machinery; Plastics & Rubber Products; Nonmetallic Mineral Products; Furniture & Related Products; Computer & Electronic Products; Fabricated Metal Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Paper Products; Miscellaneous Manufacturing; and Primary Metals. WHAT RESPONDENTS ARE SAYING
Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes. COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY Commodities Up in Price Commodities Down in Price Commodities in Short Supply Note: The number of consecutive months the commodity is listed is indicated after each item. JANUARY 2024 MANUFACTURING INDEX SUMMARIES Manufacturing PMI® A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the January Manufacturing PMI® indicates the overall economy grew for the 45th straight month after one month of contraction (April 2020). "The past relationship between the Manufacturing PMI® and the overall economy indicates that the January reading (49.1 percent) corresponds to a change of plus-1.9 percent in real gross domestic product (GDP) on an annualized basis," says Fiore. THE LAST 12 MONTHS
New Orders The five manufacturing industries that reported growth in new orders in January are: Apparel, Leather & Allied Products; Primary Metals; Chemical Products; Transportation Equipment; and Fabricated Metal Products. The 10 industries reporting a decline in new orders in January, in order, are: Wood Products; Nonmetallic Mineral Products; Furniture & Related Products; Machinery; Plastics & Rubber Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Computer & Electronic Products.
Production The four industries reporting growth in production during the month of January are: Apparel, Leather & Allied Products; Paper Products; Primary Metals; and Transportation Equipment. The 11 industries reporting a decrease in production in January — in the following order — are: Wood Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Textile Mills; Plastics & Rubber Products; Machinery; Furniture & Related Products; Fabricated Metal Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products.
Employment Of 18 manufacturing industries, three reported employment growth in January: Nonmetallic Mineral Products; Petroleum & Coal Products; and Transportation Equipment. The nine industries reporting a decrease in employment in January, in the following order, are: Paper Products; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Machinery; Food, Beverage & Tobacco Products; Chemical Products; Computer & Electronic Products; and Miscellaneous Manufacturing. Six industries reported no change in employment in January compared to December.
Supplier Deliveries† The five manufacturing industries reporting slower supplier deliveries in January are: Textile Mills; Paper Products; Plastics & Rubber Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The five industries reporting faster supplier deliveries in January are: Computer & Electronic Products; Transportation Equipment; Fabricated Metal Products; Machinery; and Chemical Products. Seven industries reported no change in delivery performance in January compared to December.
Inventories Of 18 manufacturing industries, three reported higher inventories in January: Apparel, Leather & Allied Products; Printing & Related Support Activities; and Transportation Equipment. The nine industries reporting lower inventories in January — in the following order — are: Paper Products; Computer & Electronic Products; Plastics & Rubber Products; Machinery; Electrical Equipment, Appliances & Components; Primary Metals; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Chemical Products. Six industries reported no change in raw materials inventories in January compared to December.
Customers' Inventories† The two industries reporting customers' inventories as too high in January are: Fabricated Metal Products; and Plastics & Rubber Products. The 11 industries reporting customers' inventories as too low in January, in order, are: Nonmetallic Mineral Products; Paper Products; Primary Metals; Electrical Equipment, Appliances & Components; Wood Products; Furniture & Related Products; Machinery; Miscellaneous Manufacturing; Chemical Products; Transportation Equipment; and Food, Beverage & Tobacco Products.
Prices† In January, the 10 industries that reported paying increased prices for raw materials, in order, are: Printing & Related Support Activities; Textile Mills; Fabricated Metal Products; Furniture & Related Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Transportation Equipment; Plastics & Rubber Products; and Machinery. The three industries reporting paying decreased prices for raw materials in January are: Primary Metals; Chemical Products; and Food, Beverage & Tobacco Products.
Backlog of Orders† Of 18 manufacturing industries, the two that are reporting growth in order backlogs in January are: Primary Metals; and Transportation Equipment. The nine industries reporting lower backlogs in January — in the following order — are: Wood Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Chemical Products; and Miscellaneous Manufacturing. Six industries reported no change in backlog of orders in January compared to December.
New Export Orders† The three industries reporting growth in new export orders in January are: Nonmetallic Mineral Products; Miscellaneous Manufacturing; and Transportation Equipment. The nine industries reporting a decrease in new export orders in January — in the following order — are: Paper Products; Furniture & Related Products; Computer & Electronic Products; Plastics & Rubber Products; Machinery; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Chemical Products; and Fabricated Metal Products.
Imports† The six industries reporting an increase in import volumes in January — listed in the following order — are: Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Miscellaneous Manufacturing; and Transportation Equipment. The five industries that reported lower volumes of imports in January are: Wood Products; Paper Products; Plastics & Rubber Products; Computer & Electronic Products; and Chemical Products. Seven industries reported no change in imports in January.
†The Supplier Deliveries, Customers' Inventories, Prices, Backlog of Orders, New Export Orders, and Imports indexes do not meet the accepted criteria for seasonal adjustments. Buying Policy
About This Report The data presented herein is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making. Data and Method of Presentation Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers' Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive). The resulting single index number for those meeting the criteria for seasonal adjustments (Manufacturing PMI®, New Orders, Production, Employment and Inventories) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The Manufacturing PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries, and Inventories (seasonally adjusted). Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A Manufacturing PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A Manufacturing PMI® above 42.5 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42.5 percent, it is generally declining. The distance from 50 percent or 42.5 percent is indicative of the extent of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis. The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to report on information for the current month for U.S. operations only. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month. The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease. Responses to Buying Policy reflect the percent reporting the current month's lead time, the approximate weighted number of days ahead for which commitments are made for Capital Expenditures; Production Materials; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted. ISM ROB Content Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including but not limited to tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. 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About Institute for Supply Management® (ISM®) The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the first business day* of every month after 10:00 a.m. ET. The one exception is in January, the report is released on the second business day of the month. The next Manufacturing ISM® Report On Business® featuring February 2024 data will be released at 10:00 a.m. ET on Friday, March 1, 2024. *Unless the New York Stock Exchange is closed.
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