Flextronics Ecumenical Apple factory employees work on Apple Mac Pro computer assembly in Austin, TX, November 20, 2019.
Tom Brenner | Reuters
U.S. factory occupation unexpectedly rebounded in January after contracting for five straight months amid a surge in new orders, offering desire that a prolonged slump in business investment has probably bottomed out.
The Institute for Supply Management (ISM) said on Monday its directory of national factory activity increased to a reading of 50.9 last month, the highest level since July, from an upwardly updated 47.8 in December.
A reading above 50 indicates expansion in the manufacturing sector, which accounts for 11% of the U.S. thrift. The ISM index had held below the 50 threshold for five straight months. Economists polled by Reuters had forecast the key rising to 48.5 in January from the previously reported 47.2 in December.
The improvement in the ISM data likely reflects lessening trade tensions between the United States and China. Washington and Beijing signed a Phase 1 trade deal end month. The deal, however, left in place U.S. tariffs on $360 billion of Chinese imports, about two-thirds of the unalloyed, which economists say will remain a constraint on manufacturing.
The ISM’s forward-looking new orders sub-index jumped to a reading of 52.0 endure month, the highest since May, from a revised 47.6 in December. Manufacturers also reported paying more for raw statistics and other inputs. The survey’s measure of prices paid hit its highest level in 10 months, suggesting some edifice up of inflation pressures at the factory level.
The ISM’s factory employment index rose to 46.6 last month from a changed reading of 45.2 in December, suggesting manufacturing payrolls could remain weak. Factory employment increased by 46,000 positions in 2019 after rising 264,000 in 2018.
The improvement in ISMs closely watched national survey follows a series of various readings on the manufacturing sector at the regional level.
A purchasing manager survey tracking the Chicago region slumped to a four-year low in January, and fabricating indexes from the Federal Reserve banks of Richmond and Dallas continued to show contraction in those districts. But plant activity in areas tracked by the Philadelphia and Richmond Feds both showed significant improvement in January, tracking numberless closely with ISMs findings.