Manufacturing rebounded in January after a significant slowdown the month before, the Institute for Supply Management said today in a monthly report.
The group’s manufacturing index, known as the PMI, rose to 56.6 percent last month from a restated 54.3 percent in December.
The December PMI declined from a restated 58.8 percent in November. The index typically doesn’t move that much on a month-to-month basis. In effect, the January index appears to represent a recovery.
Still, the January PMI was lower than the 58.5 percent average PMI of the past 12 months. During that period, three months (February, June and August) had PMIs of 60 percent or higher
The PMI is known as a leading indicator, meaning it’s a sign of what may be ahead in the economy. The ISM report is based on a survey of 350 purchasing and supply executives. A reading above 50% indicates a growing manufacturing economy. Below 50% indicates economic contraction. January was the 29th straight month with a PMI reading over 50%.
“We’re in a transition from a high level of expansion to expansion,” Timothy R. Fiore, chair of Tempe, Ariz.-based ISM’s Manufacturing Business Survey Committee, said on a conference call.
In January, “The biggest contributor was the growth in the new order side,” he said. “Let’s see how it goes into February.”
ISM said 14 of 18 industries reported economic expansion in January. They included textiles, miscellaneous manufacturing, primary metals, transportation equipment, machinery and fabricated metal products. One industry, non-metallic mineral products, reported economic contraction.
The group’s New Orders Index surged to 58.2 percent from 51.3 percent the month before. Eleven of 18 industries reported an increase in orders. Machinery was the only industry to report a decline in orders. New Orders had the strongest gain among the indexes that make up the PMI.
The Production Index also rose, reaching 60.5 percent in January from 54.1 percent in December. Fourteen industries reported an increase in output. Only textiles reported a production decline.
ISM’s Employment Index slipped to 55.5 percent last month from 56 percent in December. Nine industries reported job growth. Five reported job cuts, including fabricated metal products.