Economy

Manufacturing PMI Dips to Still-Strong 57.6% in January

February 2, 2022

Sentiment among purchasing managers surveyed by the Institute for Supply Management remains strongly optimistic despite a small dip in the January Manufacturing PMI to a reading of 57.6%. The index reading above 50% indicates growth in the manufacturing sector for the 20th consecutive month since the COVID-related contraction in April and May 2020.

“The U.S. manufacturing sector remains in a demand-driven, supply-chain-constrained environment, but January was the third straight month with indications of improvements in labor resources and supplier delivery performance,” said Timothy Fiore, chairman of ISM’s Manufacturing Business Survey Committee. “Still, there were shortages of critical intermediate materials, difficulties in transporting products and lack of direct labor on factory floors due to the COVID-19 omicron variant.”

Other findings from ISM’s monthly survey of purchasing professionals:

The New Orders Index slowed but remained in strong growth territory, supported by continued expansion of new export orders.
The Customers’ Inventories Index remained at a very low level.
The Backlog of Orders Index slowed but settled at more normal growth levels.
Consumption (measured by the Production and Employment indexes) grew during the period, though at a slower rate.
The Employment Index expanded for a fifth straight month, with signs that firms’ ability to hire continues to improve. This was offset by the continued challenges of turnover (quits and retirements) and resulting backfilling.

The biggest reason PMI growth was held back in January? Absenteeism due to omicron, ISM said.