The US manufacturing sector started 2024 with growth, showing the strongest improvement in performance since 2022. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index posted a reading of 50.7 in January, up from 47.9 in December 2023.
January’s upturn ended a two-month sequence of decline. It also signaled the strongest improvement in operating conditions since September 2022.
“Manufacturers have started the year with a spring in their step,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a press release.
“Business optimism about the year ahead has surged to its highest since early 2022 thanks to a jump in demand,” Williamson said. “New orders are rising at a pace not seen for over a year and a half, improving especially sharply for consumer goods as households benefit from signs of an easing in inflation and looser financial conditions.”
Payroll numbers are also rising, he said.
The report noted that employment at manufacturers rose fractionally in January, ending a three-month period of job shedding. Manufacturing firms hire in anticipation of greater new orders despite a further drop in backlogs of work.
“The brighter news is tempered by signs of factory costs rising on the back of supply delays, with costlier deliveries often linked to adverse weather and recent disruptions to global shipping. These higher costs are feeding through to increased prices charged for goods by factories, which rose in January at the fastest pace since last April,” Williamson said. “Some renewed upward pressure on consumer prices could therefore appear in the months ahead if these supply-linked inflationary trends persist.”