Breaking News
Investing Pro 0
💎 Reveal Undervalued Stocks Hiding in Any Market Get Started

U.S. manufacturing sector sinks further in January - ISM

Economic Indicators Feb 01, 2023 10:07AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A worker operates one of the metal cutting machines at Gent Machine Co.'s factory in Cleveland, Ohio, U.S., May 26, 2021. REUTERS/Timothy Aeppel

WASHINGTON(Reuters) - U.S. manufacturing contracted further in January as higher interest rates stifled demand for goods, but factories did not appear to be laying off workers in large numbers.

The Institute for Supply Management (ISM) said on Wednesday that its manufacturing PMI dropped to 47.4 last month from 48.4 in December. The third straight monthly contraction pushed the index to the lowest level since May 2020 and below the 48.7 mark viewed as consistent with a recession in the broader economy.

Economists polled by Reuters had forecast the index falling to 48.0. A PMI reading below 50 indicates contraction in manufacturing, which accounts for 11.3% of the U.S. economy.

The Federal Reserve's fastest interest rate-hiking cycle since the 1980s as it fights inflation is undercutting demand for goods, which are mostly bought on credit. The dollar's past appreciation against the currencies of the United States' main trade partners and a softening in global demand are also hurting manufacturing. Spending is shifting back to services.

The weakness in the ISM mirrored a deterioration in the so-called hard manufacturing data. Manufacturing production declined at a 2.5% annualized rate in the fourth quarter, data from the Fed showed last month.

The ISM survey's forward-looking new orders sub-index plunged to 42.5 in January from 45.1 in December. It was the fifth straight month that this measure has contracted. Weakening demand and improved raw material supplies have reduced the backlog of unfinished work at factories.

The survey's measure of supplier deliveries edged up to 45.6 from 45.1 in December. A reading below 50 indicates faster deliveries to factories. Stretched supply chains early in the COVID-19 pandemic as millions of Americans worked from home was one of the major drivers of inflation last year.

The combination of better supply and ebbing demand has resulted in a significant slowdown in consumer and wholesale inflation, with outright declines in monthly goods prices.

The ISM survey's measure of prices paid by manufacturers rose to 44.5 from 39.4 in December.

Despite demand being under pressure, factories are holding on to their workers, for now. The ISM survey's measure of factory employment dipped to 50.6 from 50.8 in December. But this gauge, which has swung up and down, has not been a good predictor of manufacturing payrolls in the government's closely watched employment report.

According to a Reuters survey of economists, manufacturing employment likely increased by 6,000 jobs in January after rising 8,000 in December. Overall, nonfarm payrolls are forecast to have increased by 185,000 jobs last month. The economy added 223,000 jobs in December.

January's employment report is due on Friday.

U.S. manufacturing sector sinks further in January - ISM

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email