The ISM index stood at 47.4% against 48.4% in December. Briefing.com analysts had expected a slightly smaller decline, at 48%.
Activity in the manufacturing industry in the United States fell in January for the third consecutive month, reaching a new low since May 2020 and presaging a difficult year for the sector.
The index stood at 47.4% against 48.4% in December, according to the survey by the professional federation ISM published on Wednesday.
Briefing.com analysts had expected a slightly smaller decline, at 48%.
Activity contracts compared to the previous month when the index is below 50%.
“Manufacturing is facing headwinds from slowing demand, high borrowing costs and unexpected supply shocks,” commented Rubeela Farooqi, chief economist at High Frequency Economics.
In detail, new orders fell by 2.6% compared to December, production by 0.6%, employment by 0.2%, and inventories by 2.1%.
At the same time, prices climbed 5.1% and order books rose 2%.
Only the transport equipment and miscellaneous equipment sectors showed growth in their activity in January.
All the others, including textiles, electrical equipment, food products and metal products, posted a decline.
“We expect more headwinds in the coming months as tight monetary policy and the recent tightening of financial conditions dampen manufacturing activity,” said Oren Klachkin of Oxford Economics.
“The jump in demand for goods caused by the pandemic is decidedly in the rearview mirror, and a difficult macroeconomic environment will contribute to a drop in industrial production in 2023,” added the analyst.
