Economic activity in the U.S. manufacturing sector grew in January, including textile mills and apparel and leather goods companies, the nation’s supply executives reported in the Manufacturing Institute for Supply Management’s (ISM) “Report on Business.”
The manufacturing purchasing manager’s index (PMI) for January registered 58.7 percent, 1.8 percent lower than the seasonally adjusted December reading of 60.5 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding, while a reading below 50 percent indicates that it is generally contracting.
“The manufacturing PMI continued to indicate strong sector expansion and U.S. economic growth in January,” Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee, said. “All five contributing subindexes were in growth territory, but at lower rates compared to December…The New Orders and Production indexes continued to expand at strong levels. The Supplier Deliveries Index continued to reflect suppliers’ difficulties in maintaining delivery rates, due to factory labor-safety issues and transportation challenges.”
Of the 18 manufacturing industries, 16 reported growth in January, including apparel, leather and allied products, and textile mills. A Manufacturing PMI above 43.1 percent, over a period of time, generally indicates an expansion of the overall economy, ISM noted.
“Survey committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are continuing to cause strains that limit manufacturing growth potential,” Fiore said. “However, panel sentiment remains optimistic, similar to December levels. Demand expanded, with the New Orders Index growing at a strong level, supported by the New Export Orders Index expanding.”
ISM’s New Orders Index registered 61.1 percent in January, a decrease of 6.4 percent from December. This indicates that new orders grew for the eighth consecutive month. A New Orders Index above 52.8 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders.
Of the 18 manufacturing industries, 13 reported growth in new orders in January and two reporting a decline in new orders, including textile mills.
The Production Index registered 60.7 percent in January, a 4 percent decline from the prior month but indicating growth for the eighth consecutive month. An index above 52.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.
Twelve industries reported growth in production during the month, and two reported decreased production, including textile mills.
The delivery performance of suppliers to manufacturing organizations was slower in January, as the Supplier Deliveries Index registered 68.2 percent. This is 0.5 percentage point higher than the 67.7 percent reported in December. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.
Seventeen industries reported slower supplier deliveries in January, led by apparel, leather and allied Products and including textile mills.
“Suppliers continue to struggle to deliver, with deliveries slowing at a faster rate compared to the previous month,” Fiore said. “Transportation challenges and challenges in supplier-labor markets are still constraining production growth, and to a greater extent compared to December. The Supplier Deliveries Index reflects the difficulties suppliers continue to experience due to COVID-19 impacts combined with strong growth in economic activity. Since stable manufacturing began in August, the index has gone up every month, indicating that suppliers are experiencing greater difficulties in meeting factory needs. Supplier labor and transportation constraints are not expected to diminish in the near-to-moderate term due to COVID-19 impacts.”
The Inventories Index registered 50.8 percent in January, 0.2 percent lower than December. Inventories grew for a fourth consecutive month after three months of contraction. An Inventories Index greater than 44.5 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis figures on overall manufacturing inventories.
The seven industries reporting higher inventories in January were topped by textile mills. Seven industries, including apparel and leather, reported no change in January compared to December.
The ISM Prices Index registered 82.1 percent, an increase of 4.5 percent compared to December, indicating that raw materials prices increased for the eighth consecutive month. This is the highest reading since April 2011, when the index registered 82.6 percent. A Prices Index above 52.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics Producer Price Index for Intermediate Materials.
All 18 industries reported paying increased prices for raw materials in January, led by apparel, leather and allied products and including textile mills.
ISM’s Imports Index registered 56.8 percent in January, an increase of 2.2 percent from December.
“Panelists continued to note record-breaking backlogs in ports of entry, as well as difficulty in arranging drayage and operating within the domestic transportation market,” Fiore said.
The 11 industries reporting growth in imports in January included textile mills.