ISM Manufacturing PMI — January 2025
Headline: The Manufacturing PMI rose 1.7 points to 50.9 from 49.2, indicating expansion after 26 consecutive months of contraction; the current trend has run for one month. The reading is a six-month high, above the prior six-month range of 46.5–49.3 and the 47.6 average. Manufacturing is above its 50.0 breakeven, while the broader economy remains growing relative to its 42.3 breakeven.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo |
|---|---|---|---|---|---|
| New Orders | 55.1 | 52.1 | +3.0 | Growing | 6-mo high |
| Production | 52.5 | 49.9 | +2.6 | Growing | 6-mo high |
| Employment | 50.3 | 45.4 | +4.9 | Growing | 6-mo high |
| Supplier Deliveries | 50.9 | 50.1 | +0.8 | Slowing | below avg (51.0) |
| Inventories | 45.9 | 48.4 | -2.5 | Contracting | below avg (46.3) |
| Customers' Inventories | 46.7 | 46.7 | 0.0 | Too Low | below avg (47.7) |
| Prices | 54.9 | 52.5 | +2.4 | Increasing | 6-mo high |
| Backlog of Orders | 44.9 | 45.9 | -1.0 | Contracting | above avg (43.2) |
| New Export Orders | 52.4 | 50.0 | +2.4 | Growing | 6-mo high |
| Imports | 51.1 | 49.7 | +1.4 | Growing | 6-mo high |
Key moves:
- Employment jumped 4.9 points to 50.3, a six-month high and a move from contraction to expansion.
- Production crossed above 50 to 52.5, also a six-month high; New Orders rose to a six-month-high 55.1, widening the demand signal.
- Prices reached a six-month high of 54.9, while New Export Orders and Imports both moved into expansion.
Insights:
- The demand signal strengthened materially: New Orders at 55.1 versus Inventories at 45.9 produces a wide positive spread, while manufacturers’ inventories are contracting. This points to demand-led production support rather than an involuntary inventory buildup.
- Customers’ Inventories remain “Too Low” at 46.7, a contrarian positive for the pipeline: lean downstream stocks should support replenishment orders, assuming demand persists.
- Production and Employment both improved sharply and crossed 50, but the Backlog of Orders remains in contraction at 44.9 after 28 months. The near-term order flow is strong, but the absence of backlog accumulation limits evidence of sustained forward capacity pressure.
- Supplier Deliveries at 50.9 indicate slower deliveries, generally consistent with firmer demand or some supply tightness, although the reading remains slightly below its six-month average.
- Prices accelerated to 54.9, a six-month high, raising input-cost and margin risks as the cyclical recovery gains traction.
Breadth & prices: Eight industries reported growth and none reported contraction. Input prices increased at a faster pace, with the Prices Index at 54.9.
Takeaway: January marks a tentative manufacturing-cycle inflection: the headline PMI, orders, production, employment, exports and imports all reached six-month highs or entered expansion. Strong new demand and low customer inventories support further improvement, but persistently contracting backlogs and rising input costs argue for a recovery that is constructive but not yet broad-based in duration or margin quality.