ISM Report on Manufacturing: Modest Growth for the First Month of 2020 a Welcome Sign

By at 6 February, 2020, 3:48 pm

by Raymond J. Keating-

The monthly takes on the economy offered by the Institute for Supply Management (ISM) point to continued modest growth in the economy – estimated at roughly 2.4 percent – during the first month of 2020.

The ISM report on manufacturing for January came in at 50.9 percent. That was up from 47.8 percent in December. A measure above 50 percent means that manufacturing is expanding, and below 50 percent points to a contraction in manufacturing.

Timothy R. Fiore, chairman of the ISM’s Manufacturing Business Survey Committee, reported, “Comments from the panel were positive, with sentiment improving compared to December. The PMI returned to expansion territory for the first time since July 2019.” For good measure, it was noted, “Global trade remains a cross-industry issue, but many respondents were positive for the first time in several months.” These are welcome changes in direction.

The ISM noted that eight of 18 manufacturing sectors reported growth in January, with eight reporting contraction.

As for the ISM report on nonmanufacturing, January saw growth, with the index registering 55.5 percent.

Anthony Nieves, chairman of the ISM’s Non-Manufacturing Business Survey Committee, pointed out: “The NMI registered 55.5 percent, which is 0.6 percentage point higher than the seasonally adjusted December reading of 54.9 percent. This represents continued growth in the non-manufacturing sector, at a slightly faster rate… The respondents remain mostly positive about business conditions and the overall economy. Respondents continue to have difficulty with labor resources.”

Among nonmanufacturing sectors, 12 reported growth in January, while six reported contraction.

While obvious challenges persist regarding manufacturing and trade, the improvement in the ISM national surveys is a welcome sign for the economy.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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