January ISM manufacturing index fell to 57.6, just beating market expectations for 57.5. This marked a 1.2 percentage point decrease from the December reading of 58.8.
New orders decreased by 3.1 percentage points to 57.9, while new export orders increased by 0.1 percentage points to 53.7.
The backlog of orders sub-index came in at 56.4, falling 6.4 percentage points from December’s 62.8 print.
The production index pulled back 1.6 percentage points to 57.8, while the employment index rose 0.6 percentage points to 54.5.
The supplier deliveries sub-index fell to 64.6 points from 64.9 in December. The sub-index continues to reflect difficulties in meeting deliveries due to production issues related to the pandemic.
14 of 18 manufacturing industries reported growth in January. Growth was led by Apparel, Leather & Allied Products; Furniture & Related Products; Miscellaneous Manufacturing, Nonmetallic Mineral Products; and Machinery.
Key Implications
The expansion rambles on and the manufacturing sector posted another month of gains in January. Amid ongoing supply chain issues and yet another wave of COVID-19 infections a slight deceleration was expected, but the sector proved resilient overall.
The start of 2022 offered plenty of room for missteps as the Omicron variant spread, but the increase in new orders is a testament to the resilience of demand. Just as important, supply chains are showing continued signs of healing, as the supplier delivery sub-index continues to fall (indicating that delivery times are lengthening at a slower pace). As this most recent wave wanes, this momentum should be carried into February, helping to ease the bottlenecks that have become characteristic of the economic recovery.
