Following 26 consecutive months of contraction, the Institute for Supply Management released a report on Monday showing U.S. manufacturing activity expanded in the month of January.
The ISM said its manufacturing PMI rose to 50.9 in January from 49.2 in December, with a reading above 50 indicating growth. Economists had expected the index to inch up to 49.8.
"The PMI has increased for three consecutive months, with the most recent bump finally returning the manufacturing sector to expansion," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.
The bigger than expected increase by the headline index partly reflected faster growth by new orders, as the new orders index climbed to 55.1 in January from 52.1 in December.
The report also showed a turnaround by production, with the production index rising to 52.5 in January from 49.9 in December, indicating growth after eight months of contraction.
The employment index also jumped to 50.3 in January from 45.4 in December, returning to expansion after contracting in 14 of the last 16 months.
On the inflation front, the prices index rose to 54.9 in January from 52.5 in December, suggesting prices increased for the fourth straight month.
"Prices growth was moderate, indicating that further growth will put additional pressure on prices," said Fiore. "As predicted, maintaining a slower rate of price increases as demand returns will be a major challenge for 2025."
The ISM is scheduled to release a separate report on service sector activity in the month of January on Wednesday. The services PMI is expected to inch up to 54.2 in January after rising to 54.1 in December.
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