US manufacturing sector grows following 26 months of contraction

(MENAFN) The US manufacturing sector saw a notable improvement in January, signaling a significant recovery after 26 consecutive months of contraction. According to a report from the Institute for supply Management (ISM) released on Monday, the Manufacturing Purchasing Managers' Index (PMI) rose to 50.9% in January, marking a 1.7 percentage point increase from December's seasonally adjusted 49.2%. A PMI reading above 50 signifies growth, indicating a positive shift in the manufacturing landscape.

Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, highlighted that the overall Economy continued to expand for the 57th consecutive month, following a brief contraction in April 2020. This positive trend reflects a broader recovery across various sectors. Key indicators such as the New Orders Index saw improvement, rising to 55.1% in January, a 3 percentage point increase from the previous month, and marking the third consecutive month of growth after a prolonged period of decline.

Another encouraging sign was the return to expansion in the Production Index, which increased to 52.5% from 49.9% in December. This suggests a renewed commitment to boosting factory output, which is vital for sustaining the recovery. Additionally, the Prices Index, which measures cost pressures, grew to 54.9% in January, up 2.4 percentage points from December. Fiore noted that managing price growth amid rising demand will be an ongoing challenge as the sector continues to recover.

Despite the positive momentum, the Backlog of Orders Index registered a slight decrease to 44.9%, down from 45.9% in December, indicating that some pressures remain in the system. Nevertheless, the overall growth in manufacturing points to a favorable outlook for the sector in the coming months.

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