The U.S. manufacturing sector expanded in January for the first time in 12 months, with new orders and production in expansion territory, according to the Institute for Supply Management’s latest Purchasing Managers’ Index (PMI).
The overall Manufacturing PMI for January registered 52.6%, which was a 4.7 percentage point increase from the seasonally adjusted reading of 47.9% in December, according to Susan Spence, MBA, Chair of the ISM Manufacturing Business Survey Committee.
A PMI reading above 50% indicates that the manufacturing sector is generally expanding while a reading below 50% indicates it is generally contracting.
“In January, U.S. manufacturing activity returned to expansion territory, with improvements in all five subindexes that make up the PMI (New Orders, Production, Employment, Supplier Deliveries, and Inventories), though the Employment and Inventories indexes still remain in contraction,” Spence said.
The New Orders Index expanded in January for the first time since August 2025, with a reading of 57.1%. This represents a 9.7 percentage point increase from December and is the highest the New Orders Index has been since February of 2022.
The Production Index for January was 55.9%, which was 5.2 percentage points higher than December and the highest since it reached 58.1% in February 2022.
The Employment Index was still in contraction territory, registering 48.1%. Nevertheless, this was 3.3 percentage points higher than December’s reading.
The Inventories Index registered 47.6%, an increase of 1.9 percentage points compared to December, but still in contraction territory. The Customer Inventories Index reading was 38.7%, a 4.6-percentage point decrease from the prior month and the lowest since June 2022.
The Supplier Deliveries Index indicated a further slowdown in performance for the second month in a row. This is the only ISM PMI index that is inversed; a reading above 50 indicates slower deliveries. In January, the Supplier Deliveries Index was 54.4%, 3.6 percentage point increase from December.
Of the six biggest manufacturing industries, five registered growth in January: Transportation Equipment; Machinery; Chemical Products; Food, Beverage & Tobacco Products and Computer & Electronic Products.
The ISM Manufacturing PMI Report is based on data compiled from purchasing and supply executives nationwide.
