ISM Report: Manufacturing Activity Enters Expansion Territory Following 26 Months of Contraction
1.7 points higher than December’s reading, the January ISM (Institute for Supply Management) Manufacturing PMI registered 50.9%, indicating that the sector expanded for the first time in over two years.
“Of the five subindexes that directly factor into the Manufacturing PMI, four (new orders, production, employment and supplier deliveries) were in expansion territory, compared to three in December,” says Timothy Fiore, chair of the ISM’s manufacturing business survey committee.
With a reading of 55.1%, 3 points higher than December’s seasonally adjusted figure, the new orders index grew for the third consecutive month. Anything lower than 50% represents contraction.
The production and employment indexes entered expansion territory in January, growing 2.6 points to 52.5% and 4.9 points to 50.3%, respectively.
Eight industries reported growth last month:
- Textile mills
- Primary metals
- Petroleum & coal products
- Chemical products
- Machinery
- Transportation equipment
- Plastics & rubber products
- Electrical equipment, appliances & components
“Four of the six largest manufacturing industries (petroleum & coal products, chemical products, machinery and transportation equipment) expanded in January, up from none in December,” says Fiore.
In the comments of the survey, respondents from multiple industries indicate a strong start to 2025, although many are wary of supply chain and tariff concerns.
“The organization is mindful of potential tariffs and what to do with re-routing or cost increases in supply chains that are impacted,” reports an executive from the food, beverage & tobacco products industry.
“Alleviating supply chain conditions are noticeably pivoting back into acute shortage situations, with headwinds following,” writes a respondent from the transportation equipment industry. “For aerospace and defense companies, critical minerals supply chains are tightening dramatically due to Chinese restrictions. Concerns are growing of an environment of more supply chain shortages.”
