The ISM Manufacturing PMI for the US dropped for a second straight month to 57.6 in January from 58.8 in December, compared to analysts’ expectations of 57.5 amid the hit of the Covid-19 Omicron variant and persisting supply and labor shortages, according to Institute for Supply Management. "The US manufacturing sector remains in a demand-driven, supply chain-constrained environment, but January was the third straight month with indications of improvements in labor resources and supplier delivery performance. Still, there were shortages of critical intermediate materials, difficulties in transporting products and lack of direct labor on factory floors due to the COVID-19 omicron variant. Quits rate and early retirements hinder reliable consumption. Panel sentiment remains strongly optimistic", Timothy Fiore, Chair of the ISM said.
Today's ISM reading pointed to the slowest growth in factory activity since November of 2020. Earlier, IHS Markit US Manufacturing PMI was revised higher to 55.5 in January of 2022 from a preliminary of 55, but continued to point to the weakest rise in factory activity since October of 2020, as output growth was muted. Source: Bloomberg via ZeroHedge
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Create account Try a demo Download mobile app Download mobile appNew orders sub-index fell to 57.9 in January, which is the lowest level since June 2020, from 61.0 in December, while prices paid subindex surged to 76.1 from 68.2 in December, which points out that inflation could remain uncomfortably high in upcoming months.
Employment sub-index jumped to a 10-month high of 54.5 from 53.9 in December. Meanwhile JOLTs report also surprised on the upside which may indicate that the labour market continues its recovery. Therefore Friday's NFP reading may also surprise positively especially if the ISM report comes out in a similar tone. According to economists, nonfarm payrolls likely increased by 153,000 jobs in January after rising 199,000 in December.
ISM Prices Paid rose sharply in January, while New Orders slowed to their weakest since June 2020. Employment index moved higher. Source: Bloomberg via ZeroHedge
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