Could the Biden-era manufacturing slump be over so quickly?
Activity in the U.S. manufacturing sector expanded in January after 26 months of contraction, a survey from the Institute for Supply Management (ISM) indicated on Monday. The ISM purchasing managers index for manufacturing rose to 50.9 percent from 49.2 percent in December, crossing the 50 percent threshold dividing contraction from expansion.
The improvement beat expectations. Economists had forecast a smaller gain to 49.5, which would have meant factory activity was still contracting.
The survey indicates that new orders grew for the third straight month after seven months in contraction. The production index crossed into expansion territory after eight months in contraction. The employment index jumped into expansion territory as well.
The index has surged since the election of Donald Trump, as manufacturers anticipate more business-friendly policies. Trump has said he will cut taxes, reduce regulation, and raise tariffs to protect U.S. manufacturers from unfair trade practices.
The gauge of prices increased, indicating rising prices, but remains at a moderate level.
“Prices growth was moderate, indicating that further growth will put additional pressure on prices. As predicted, maintaining a slower rate of price increases as demand returns will be a major challenge for 2025,” said ISM’s Timothy Fiore.
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