Monday, February 3, 2014

ISM Manufacturing Index Dropped in January

The ISM manufacturing index declined in January to 51.3, dropping 5.3 points for the the second consecutive decline. The index is weaker than expected and starts 2014 off on a soft note. The index remains in expansionary territory, as the reading is above 50. However, the colder than expected weather in January likely contributed to a lower manufacturing index. The weaker report is not a cause for concern yet, especially if next month is stronger.

The details of the report saw across the board broad declines. New orders dropped to 51.2 from 64.2. Inventories shrank further, declining to 44.0. The gap between new orders and inventories – a proxy for future growth – declined substantially to 7.2, from 17.2 the previous month. Production also saw a decline.

Trade indicators declined slightly by 0.5 points to 54.5.

The employment index dropped to 52.3. It is still in expansionary territory, but it’s the lowest value since June 2013.

Read the ISM release.

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