U.S. manufacturing continued to grow at an exceptionally fast pace in January despite rising coronavirus cases, political turmoil, and mounting evidence of sluggishness in the labor market and retail sector.
The Institute for Supply Management said Monday that its manufacturing index slipped to 58.7 percent in the first month of 2021 from 60.5 December. Readings over 50 indicate growth, and scores over 55 percent are considered exceptional. This was the eighth consecutive month of expansionary readings for the index.
December’s reading was the highest in almost two and a half years, pushed up in part by lingering built-up demand from the lockdowns earlier in the year and in part by a rush to produce goods before more stringent regulations kick in. It was near the highest level since around 2005.
Economists surveyed by Econoday forecast a reading of 60 percent.
“The manufacturing economy continued its recovery in January. Survey committee members reported that their companies and suppliers continue to operate in reconfigured factories,” said ISM’s Timothy Fiore.
He said that issues such as absenteeism, short-term shutdowns to sanitize facilities, and difficulties in returning and hiring workers continue to be challenges that “limit manufacturing growth potential.”
Sixteen of the 18 industries in the ISM survey expanded in January, unchanged from the prior month.
“Of the six biggest manufacturing industries, five — Chemical Products; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Computer & Electronic Products — registered moderate to strong growth in January. Petroleum & Coal Products contracted,” Fiore said.
The employment barometer rose to 52.6 percent from 51.7 percent — the best reading in nearly 2 years.