Although the U.S. manufacturing sector continued to grow for the 20th consecutive month in January, the rate of growth was slower than in December and slower than economists generally expected.
The Institute for Supply Management's (ISM) closely watched PMI measure of business activity was at 56.4% last month, nine-tenths of a percentage point less than December's 57.3% and seven-tenths of a percentage point below the 57.1% economists anticipated. A figure above 50% indicates that the manufacturing sector is expanding; a figure below 50% signals contraction.
ISM's detailed data for January show new orders for manufactured goods slowing their growth pace from December, production growing faster, employment growing faster and inventories staying about the same.
For Norbert J. Ore, all that adds up to a good beginning for the first calendar quarter of 2005. "Even though the PMI is slightly lower, the month-over-month growth is still quite strong and will provide significant momentum for the remainder of [the first quarter]," says Ore, the chair of ISM's manufacturing business survey committee.
The ISM manufacturing index is based on information supplied by purchasing and supply executives in about 400 industrial companies.