Driving the uptick in the headline figure was a renewed expansion in new orders at manufacturing firms at the start of the year. The pace of growth was moderate overall and the quickest since May 2022. Where an increase was noted, companies linked this to successful marketing initiatives and stronger customer demand.
In January 2024, the US manufacturing sector witnessed its first improvement since April 2023, with the PMI hitting 50.7.
New orders fuelled this revival, achieving the fastest growth since May 2022, primarily through domestic demand as exports declined.
Despite facing supply disruptions and increased costs, manufacturers remained optimistic.
That said, improved demand conditions were domestically focused, as new export orders fell for the nineteenth time in the last 20 months. Europe and Canada were identified by panellists as key export markets with a weakened sales environment, as per S&P Global.
Despite greater new order inflows, goods producers recorded a drop in output during January. Supply disruption stemming from severe storms and transportation delays reportedly hampered firms’ ability to expand production. The pace of output decline eased to only a marginal pace, however.
Supplier delivery performance deteriorated for the first time in just over a year. Although only marginal, the extent to which lead times for inputs lengthened was the greatest since October 2022.
Concurrently, higher transportation, supplier and fuel costs pushed up the pace of input price inflation in January. The rate of increase accelerated for the second month running to the sharpest since April 2023, despite being softer than the series average.
Meanwhile, manufacturers stated that output prices continued to rise as firms sought to pass on higher costs to customers. The pace of charge inflation was broadly in line with the series trend and the quickest in nine months.
Employment at manufacturers rose fractionally in January, thereby ending a three-month period of job shedding. Firms hired in anticipation of greater new orders despite a further strong drop in backlogs of work.
A rise in new orders led firms to cut their input buying at a much slower pace compared to that seen in December. Although stocks of inputs also continued to fall, the pace of depletion eased to a marginal pace, with stocks of finished goods also declining only slightly.
Finally, business confidence at goods producers jumped to a 21-month high in January. Optimism was reportedly underpinned by planned investment in marketing spending and building capacity, alongside hopes of stronger demand conditions.
Fibre2Fashion News Desk (DP)
