Activity in the U.S. manufacturing sector contracted for the third consecutive month in January, the Institute for Supply Management revealed in a report released on Wednesday.
The ISM said its manufacturing PMI dipped to 47.4 in January from 48.4 in December, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 48.0.
“The U.S. manufacturing sector again contracted, with the Manufacturing PMI at its lowest level since the coronavirus pandemic recovery began,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.
He added, “With Business Survey Committee panelists reporting softening new order rates over the previous nine months, the January composite index reading reflects companies slowing outputs to better match demand in the first half of 2023 and prepare for growth in the second half of the year.”
The decrease by the headline index came as the new orders index fell to 42.5 in January from 45.1 in December, while the production index slipped to 48.0 from 48.6.
The employment index also edged down to 50.6 in January from 50.8 in December, although the reading above 50 indicated continued job growth.
Meanwhile, the prices index climbed to 44.5 in January from 39.4 in the previous month, indicating a slower pace of contraction.
The ISM is scheduled to release a separate report on service sector activity in the month of January on Friday. The services PMI is expected to inch up to 50.3 in January from 49.6 in December.
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