WASHINGTON, D.C.: US manufacturing activity contracted for the fourth straight month in January, though the overall economy continues to grow, the Institute for Supply Management’s (ISM) survey showed Monday.
The ISM purchasing managers index (PMI) for the manufacturing sector registered 48.2, slightly better than the 48.0 registered in December. Anything below 50 indicates contraction.
More than half of the 18 industries surveyed reported business was worse, led by the oil and gas sector which has been cutting back sharply amid the plunge in oil prices.
But also reporting business was shrinking were the apparel, food and beverage, transportation equipment and fabricated metal products sectors.
Still growing were the computer and electronics, machinery, electrical equipment and printing sectors.
“We are a bit slower, but staying busy,” said a survey respondent from the fabricated metal products industry.
However, commented another from the food and beverage sector: “Much worldwide macroeconomic uncertainty affecting our business. Business confidence seems low.”
Across all manufacturing industries, producer inventories continued to contract while customer inventories were still too high; prices decreased and employment contracted further.
On the brighter side, new orders began to grow after having contracted in November and December.
Despite the manufacturing downturn, the ISM said its data indicated that overall the US economy continued to grow last month, even if at a slow pace.
“The past relationship between the PMI and the overall economy indicates that the PMI for January [48.2 percent] corresponds to a 1.6 percent increase in real gross domestic product [GDP] on an annualized basis,” said Bradley Holcomb, who leads the ISM Manufacturing Business Survey Committee.