Steel Mills
ISM: Manufacturing Activity Slows Further in January
February 1, 2023
US manufacturing activity retreated in January, the third consecutive monthly decline, according to the Institute for Supply Management (ISM).
The Manufacturing PMI fell to 47.4% in the first month of 2023, the lowest level since May 2020, when it registered a seasonally adjusted 43.5%, ISM said. Any reading below 50% indicates the manufacturing sector is generally contracting.
January’s figure was down from a seasonally adjusted 48.4% in December. ISM said a reading above 48.7%, over a period of time, generally indicates an expansion of the overall economy. This puts the economy in its second straight month of contraction, following 30 months of expansion.
The New Orders index reading stood at 42.5% in January, down 2.6 percentage points from 45.1% in December, and the fifth consecutive contraction.
“New order rates remain depressed due to buyer and supplier disagreements regarding price levels and delivery lead times; these should be resolved by the second quarter,” ISM chair Timothy R. Fiore said in a statement.
He noted that none of the six largest manufacturing sectors reported increased new orders.
“Uncertainty regarding future demand, buyer/supplier disagreements on prices and lead times, and hangover from overordering in 2021 and 2022 continue to weigh heavily on the index,” he said
A respondent to the report in the fabricated metal products sector sees the outlook for 1H 2023 as “very soft.”
“Demand for our products has taken a sharp downward turn. Our inventories are high, as well as our customers,” the respondent said. “It seems everyone is bracing for a recession.”
An interactive history of the ISM Manufacturing Report on Business PMI index is available on our website. If you need assistance logging into or navigating the website, please contact us at info@SteelMarketUpdate.com.
By Ethan Bernard, ethan@steelmarketupdate.com
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