US manufacturing activity expanded in January after 26 consecutive months of contraction, according to the Institute for Supply Management's latest factory survey.
The manufacturing purchasing managers' index (PMI) registered 50.9 in January, up from 49.2 in December. The new orders index rose to 55.1 last month from 52.1 in December, marking a third month of expansion. Readings above 50 signal expansion while readings under that point to contraction.
Production rose to 52.5 last month from 49.9 the prior month. Employment rose to 50.3 from 45.4.
"Demand clearly improved, while output expanded and inputs remained accommodative," ISM said. "Demand and production improved; and employment expanded."
US factory activity expanded robustly in the first two years after Covid-19 hit, then contracted for the subsequent two years, even as growth in services activity, the largest part of the economy, maintained the overall economy in expansion territory.
The new export orders index rose by 2.4 points to 52.4 and the imports index rose by 1.4 points to 51.1.
The prices index rose to 54.9 from 52.5, with aluminum, freight rates, natural gas, and scrap among gainers.
"Prices growth was moderate, indicating that further growth will put additional pressure on prices," ISM said.
The inventories index fell by 2.5 to 45.9, signaling contracting inventories. Backlog of orders fell by one point to 44.9, indicating order backlogs contracted for the 28th consecutive month after 27 months of expansion.
Supplier deliveries rose by 0.8 to 50.9, suggesting marginally slower deliveries.
By Bob Willis
