PMI
Manufacturing expanded in January as the PMI registered 50.7 percent, an increase of 2.3 percentage points when compared to December’s seasonally adjusted reading of 48.4 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI in excess of 41.1 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates that both the overall economy and the manufacturing sector are growing at this time. "The past relationship between the PMI and the overall economy indicates that the PMI for January (50.7) corresponds to a 3 percent increase in real gross domestic product (GDP) on an annual basis."
Production
ISM’s Production Index rose to 55.2 percent in January, an increase of 6.6 percentage points when compared to December’s seasonally adjusted reading of 48.6 percent. An index above 49.9 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.
Employment
ISM’s Employment Index registered 47.1 percent in January, which is a decrease of 1.6 percentage points when compared to December’s seasonally adjusted reading of 48.7 percent. An Employment Index above 49.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Inventories
Manufacturers’ inventories contracted in January as the Inventories Index registered 49.1 percent, which is 3.7 percentage points higher than December’s seasonally adjusted reading of 45.4 percent. This is the 21st consecutive month of inventory liquidation. An Inventories Index greater than 42.4 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis’ (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
Prices
The ISM Prices Index registered 76 percent in January, indicating manufacturers are paying significantly higher prices on average when compared to December. While 55 percent of respondents reported paying higher prices and 3 percent reported paying lower prices, 42 percent of supply executives reported paying the same prices as the preceding month. A Prices Index above 47.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.
