Economy

ISM Manufacturing Index Down Slightly in January

February 1, 2018

Manufacturing activity slipped slightly in January, according to the latest Report on Business from the Institute for Supply Management. The ISM Index edged downward to 59.1 percent from 59.3 percent in December, but remained higher than its average reading of 57.4 for 2017.

Indexes for new orders fell 2 points to 65.4 percent and production 0.7 points to 64.5 percent. Backlog of orders increased during the month. The employment index hit an eight-month low of 54.2 percent. Any reading above 50 indicates growth.

The supplier deliveries index increased almost 2 points to 59.1, indicating slower deliveries in January.

The inventories index increased 3.8 percentage points to 52.3. Customer inventories were considered too low, while raw material inventories were growing. The survey reflected price increases across all industry sectors.

The new export orders index indicated growth for the 23rd consecutive month, achieving the highest expansion since April 2011. The index rose 2.2 points to 59.8. “All six big industry sectors, accounting for 71 percent of manufacturing GDP, continued to expand export activity during the period,” says ISM Chairman Timothy R. Fiore.

Imports also grew in January, said ISM. The imports index grew 1.9 points to 58.4. “Imports expanded at noticeably greater rates during the period in order to keep pace with production demand,” said Fiore.

Fourteen of the 18 manufacturing industries surveyed by ISM reported growth in January; fabricated metal products and primary metals were the second and fourth highest, respectively.

Some of the comments from the survey follow:

• “Slow start to 2018; pricing on metals is heading up and quotes/orders are picking up as well.” (Fabricated Metal Products)

• “Overall, business remains steady. With several key programs to begin ramping up in the industry, outlook looks good for calendar year 2018.” (Transportation Equipment)

• “We have heard reports of additional business due to the recent reduction of tax rates.” (Machinery)

• “Sales nationally and internationally are strong in Q1. We are increasing our CapEx spend by 30 percent to 40 percent over the previous year.” (Chemical Products)