The ISM index fell to 57.6 in the first month of this 2022 from 58.8 in December. The data from just last month is equivalent to the lowest reading since November 2020.
US manufacturing growth lost a little more steam in January amid a surge in coronavirus cases, while a measure of material costs accelerated.
The index of factory activity of the Institute of Supply Management (ISM, its acronym in English) fell to 57.6, the third consecutive decline and the lowest reading since November 2020, from 58.8 the previous month, according to data published on Tuesday. However, readings above 50 indicate expansion and the latest figures show that the manufacturing sector remains robust.
The group’s production and new orders measures fell to the lowest level since mid-2020, suggesting that the recent wave of cases due to the omicron variant may have affected factory operations.
Prices for materials used in the production process, already high due to lingering supply-demand imbalances related to the pandemic, rose nearly 8 points last month. This is the biggest advance since the end of 2020 and was likely a reflection, at least in part, of rising oil prices.
Purchasing managers’ data also showed that supply problems continued to ease, although they remain persistent. Supplier lead times improved slightly and the ISM indicator for backorders fell to the lowest level since October 2020.
The ISM data also showed that factories were more successful in adding to their payrolls. The employment index rose to a 10-month high. The government jobs report, released on Friday, is expected to show manufacturers added nearly 25,000 jobs in January.
Meanwhile, factory customer inventories, which remain very tight, improved slightly. The ISM index rose to 33, the highest level since January last year.
Supply chains aren’t expected to normalize for a few months as the pandemic continues to make it difficult for US growers to stock up adequately.
.
