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United States PMI January 2020

United States: ISM manufacturing index dips but remains robust in January

The Institute for Supply Management (ISM) manufacturing index ticked down to 58.7 in January from 60.5 in December, and missed market expectations of a 60.0 reading. Nevertheless, the index remained well above the 50-threshold that separates expansion from contraction in the manufacturing sector.

January’s slight moderation was the result of softer growth in new orders and production, while employment levels increased relative to the previous month. Moreover, backlogs of work increased slightly in January, while new export orders rose at a slower pace. On the price front, input prices continued to rise on the back of higher raw material prices.

Commenting on the state of the manufacturing sector with regard to January’s print, analysts at Goldman Sachs noted:

“The underlying composition was soft, as the employment (+0.9pt to 52.6) component increased, but the production (-4.0pt to 60.7) and new orders (-6.4pt to 61.1) components decreased by wider margins. The supplier deliveries component edged up by 0.5pt to 68.2, and the inventory index edged down by 0.2pt to 50.8. The prices paid measure increased by 4.5pt to 82.1 (nsa)[…] We launched our past-quarter GDP tracking estimate for Q4 at +4.2% (qoq ar), compared to +4.0% as originally reported. We left our Q1 GDP tracking estimate unchanged at +5.0%.”

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