Adjusted for seasonal influences, the headline U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 53.7 in January, down from an 11-month high of 55.0 during December. The latest reading was the lowest since last October, but remained above the neutral 50.0 value and pointed to a solid improvement in business conditions.
U.S. manufacturers indicated that output and new business growth rates slowed in January, with some attributing this to disruptions from the extreme weather conditions at the start of the year. The slowdown also reflected in part a drop in new export orders for the first time since last September. Nonetheless, manufacturers remained positive in terms of their staff hiring in January, with employment levels rising for the seventh successive month.
January data signalled a further expansion of manufacturing production levels, although the latest rise was the least marked for three months. Survey respondents commented that output had been disrupted by extreme weather conditions at the start of 2014, with a number of firms noting delays in the receipt of inputs from suppliers.
In line with the trend for output, levels of new work received by U.S. manufacturers rose at the slowest pace for three months in January. Weaker overall growth of incoming new business partly reflected softer export demand at the start of the year. Latest data signalled a drop in new orders from abroad for the first time in four months, although the pace of decline was only slight.
Slower new order growth helped alleviate pressures on capacity at U.S. manufacturers, as highlighted by a drop in backlogs of work for the first time since August 2013. Reduced levels of unfinished work also reflected ongoing job creation in the manufacturing sector, with employment growth sustained at a solid pace in January.
Manufacturers responded to weaker new business gains by increasing their input buying at a slower rate in January. Nonetheless, supplier lead-times lengthened markedly amid disruptions from extreme weather conditions. On the inflation front, average input costs and factory gate charges both increased at slower rates in January.
Large manufacturers (more than 500 employees) were the weakest performing of the three company size categories monitored by the survey in January, with business conditions improving at the slowest pace for a year-and-a-half. Nonetheless, in line with the trend seen across other company size groups, a positive trend in employment numbers was sustained at the start of 2014.
By market group, intermediate goods producers recorded the strongest improvement in business conditions, followed by companies operating in the investment goods category. The weakest improvement in business conditions was posted by consumer goods producers in January. Latest data indicated that net job creation was maintained across all three market groups at the start of the year.