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ISM Report: Overall Economy, Manufacturing Grew in January

Feb. 3, 2020
The manufacturing sector began to expand again for the first time since July 2019.

Supply chain executives report that activity in the manufacturing sector grew in January 2020, according to the monthly report from the Institute for Supply Management released February 3. Timothy Fiore, Chair of the ISM, reported that the January PMI increased to 50.9%, up 3.1 points from December’s 47.8%.

Supply managers were “positive” compared to December, Fiore said. Fiore found that indexes for demand and consumption of manufacturing products increased, but noted that the input metric—a measure of supplier deliveries, inventories and imports—shrank. Fiore said that was “due primarily to increasing contraction in inventories while supplier deliveries remained in expansion territory, but at a modest rate.” Prices also increased, as they also did in December.

“Global trade remains a cross-industry issue,” said Fiore, but noted that “many respondents were positive for the first time in several months.” Food and beverage companies performed the strongest on global trade, with computers and electric products right behind; Petroleum and coal industries performed the worst.

“Business is good—above last year, though a little below plan,” reported an unnamed respondent in the Furniture and Related Products industries. “Business has picked up considerably,” said a Computer & Electronic Products respondent.

Respondents from the electrical equipment, petroleum and coal, and transportation equipment were less optimistic: A respondent from the electrical equipment industry said the holiday slowdown of 2019 was “slightly more significant” than previous years, and a transportation equipment respondent said simply, “Continued signs of slowdown in manufacturing.”

New orders, production, new export orders, and import indexes are all growing from previous contractions, according to the report. Prices also continued to rise for the second month, faster than before. The contraction in employment, a six-month trend, slowed somewhat but continued to shrink.

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