Macro Flash Report
January Manufacturing PMIs
Takeaway:
Manufacturing activity measured by the two prominent PMIs finally showed a breakthrough into expansion territory in January. The follow through from previously encouraging trends in 4Q24 brings optimism to the sector. However, it is important to remember that this is simply the first expansion after severely prolonged contraction. We anticipate that this trend will continue, but it will take months for before this materialized into increased steel consumption.
S&P Global US (dotted) & ISM Manufacturing PMIs (solid)
The ISM Manufacturing PMI increased to 50.9, surpassing the market expected 49.3 and up from 49.2 in December. This marks the first expansion after 26 consecutive month in contraction.
- New orders rose at a faster rate (55.1 vs 52.1).
- Rebounds were seen in production (52.5 vs 49.9) and employment (50.3 vs 45.4).
- Inventories declined further (45.9 vs 48.4), and price pressures accelerated (54.9 vs 52.5) for the fourth consecutive month of increases.
The S&P Global US Manufacturing PMI improved to 51.2 from the preliminary estimate of 50.1 and up from December’s 49.4. This marks the first expansionary reading since June 2024.
- New business inflows rose for the first time since June, while backlogs continued to decline.
- Production expanded for the first time in six months and employment increased for the third consecutive month.
- Input and selling prices both accelerated sharply.
- Business optimism soared to a 34-month high, the strongest monthly advance in sentiment since November 2020.