Economy

Expansion of US Manufacturing Activity Eases in January -- ISM

Expansion of US Manufacturing Activity Eases in January -- ISM”

Readings over 50 indicate growth, and scores over 55 percent are considered exceptional.

Both new orders and production deaccelerated last month, contributing to the lower index level for January.

The ISM new orders sub-index fell to 61.1 last month from 67.5 in December. As of writing, the US Dollar Index was up 0.28% on the day at 90.83.

Further details of the publication revealed that the Employment Index improved to 52.6 from 51.7 and the Prices Paid Index jumped to the highest level since April 2011 at 82.1 from 77.6. The imports index rose by 2.2 percentage points to 56.8%.

Separate data showed South Korea's exports jumped 11.4 per cent in January from a year earlier to mark a third straight month of gains due in part to surging sales of memory chips. The two industries reporting contraction in January are printing & related support activities; and petroleum & coal products.

"Demand expanded, with the new orders index growing at a strong level, supported by the new export orders index expanding, customers" inventories index remaining in "too low' territory and at a level considered a positive for future production, and the backlog of orders index remaining at high levels". "The employment index expanded for a second straight month, but panelists continue to note difficulties in attracting and retaining labor at their companies and supplier facilities".

ISM member respondent comments in the report were mixed, highlighting how COVID-19 continues to impact manufacturing operations and output.

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The official manufacturing Purchasing Manager's Index (PMI) fell to 51.3 in January from 51.9 in December, the National Bureau of Statistics said in a statement on Sunday.

But bottlenecks in the supply chain continued driving up costs for manufacturers.

The inventories index came in at 50.8, nearly unchanged from December, and the prices index continued its upward trend and reached 82.1.

In an interview, Tim Fiore, Chair of the ISM's Manufacturing Business Survey Committee, said that even with some sequential declines in some key metrics, from December to January, the overall manufacturing outlook remains on solid footing.

Five of the six biggest manufacturing industries had moderate to strong growth in January, including chemical products; fabricated metal products; transportation equipment; food, beverage and tobacco products; and computer and electronic products.

Factories in Germany, Europe's biggest economy, had been humming along during the pandemic on higher demand from overseas, but also suffered from increasing supply delays and another hard lockdown.

The index is based on a survey of executives in 18 industries. Continued Chinese economic success despite COVID-19 may prompt some countries still struggling to recover economically from the pandemic to view the Chinese state-owned company model as an answer to stimulate their domestic economies.



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