The US Purchasing Managers Index for January was released Wednesday by the Institute for Supply Management (ISM), and had a score of 47.4, 1 percentage point lower than the seasonally adjusted 48.4 recorded in December.
Supply Chain Digest Says...
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| One manager from the chemicals sector said: “Conditions are reasonable. Sales are a little better than planned. Cost pressures are easing for most products. There have been a lot fewer supply disruptions so far this year. |
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The PMI also came in below the key 50 mark that separates US manufacturing expansion from contraction.
It is also the lowest level since May 2020, when it registered a seasonally adjusted 43.5.
Regarding the overall US economy, this score indicates a second month of contraction after a 30-month period of expansion dating to 2020.
In perhaps worse economic news, the New Orders Index remained in contraction territory at a low score of 42.5, 2.6 percentage points lower than the seasonally adjusted figure of 45.1 recorded in December, in a negative sign for future US manufacturing activity.
Other measures in the January report were also weak. For example, the Production Index reading of 48 is a 0.6-percentage point decrease compared to December’s seasonally adjusted figure of 48.6.
The Backlog of Orders Index registered 43.4, 2 percentage points higher than the December reading of 41.4 percent but still below the key 50 mark.
The Prices Index registered 44.5, up 5.1 percentage points compared to the December figure of 39.4 percent, but also below the 50 level.
The index, which tracks whether costs of materials, components and other inputs are rising or falling (below 50 = falling), was just a few months ago above 80, as inflation took off.
US PMI Last 12 Months
Source: ISM
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Just two of the US 18 industry sectors tracked by the PMI reported growth in January: Miscellaneous Manufacturing and Transportation Equipment.
As always, there were some interesting comments from PMI survey resspondents.
Said one manager from the chemicals sector: "Cost pressures are easing for most products. There have been a lot fewer supply disruptions so far this year, and few expected in the short term. The crystal ball remains a little blurry for the rest of 2023."
Added another respondent in the transportation equipment industry: “Supply chain issues continue to plague our production schedules. Transportation from our overseas suppliers is also contributing to delays. Lead times have doubled for critical electronics, gaskets, sealants, and specialized steel.”
Finally, a manager in the electric equipment sector said that “Some business segments showing demand softening globally. Many materials showing improved lead times as well as cost deflation.”
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