Improving Manufacturing Shows US Economy Going in the Right Direction
The US economy was heading lower last year, softening across most sectors, however manufacturing was hit the hardest globally from the surge
The US economy was heading lower last year, softening across most sectors, however manufacturing was hit the hardest globally from the surge in prices and in interest rates, falling deep in recession. But, in recent months we have seen a considerable improvement in all sectors of the economy and now manufacturing is showing signs of reversing after bottoming out, which will put the US economy back on the right track.
The start of 2024 seems promising with sales exceeding forecasts overall, while costs remain essentially unchanged according to the ISM. Prices for certain commodities have increased owing to supply constraints. However, the cost of international freight has increased significantly in the near term.
The commercial vehicle industry looks to be contracting somewhat in 2024 compared to the previous year. Forecast sales have declined in most product areas. The majority of supply chains, including those for semiconductors, have steadied which is great news since this was a major problem 2-3 years ago, with the only substantial increase being transit over the Red Sea. The trade in general continues to stabilize.
ISM Manufacturing Report for January
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- Sales are exceeding forecasts.
- Costs remain essentially unchanged.
- Some commodities have seen price increases due to supply constraints.
- Short commodity market bets have been corrected.
- The cost of international freight has significantly increased in the near term.
- Chemical Products Industry:
- The commercial vehicle industry appears to be contracting in 2024 compared to the previous year.
- Forecasted sales have declined in most product areas, with only a slight increase due to clients’ competitive sourcing and transition to new technologies.
- Supply chains, including those for semiconductors, have steadied, with the only substantial increase being transit over the Red Sea.
- Transportation Equipment Industry:
- Business continues to stabilize.
- Cash flow is expected to be constrained in 2024.
- Food, Beverage, and Tobacco Products Industry:
- The industry is experiencing stabilization.
- Cash flow is expected to be constrained in 2024.
US January ISM Manufacturing Report
- January ISM manufacturing 49.1 vs 47.0 expected
- Best reading since October 2022
- December ISM manufacturing was 47.4
Details:
- Prices paid 52.9 vs 45.2 prior
- Employment 47.1 vs 48.1 prior
- New orders 52.5 vs 47.1 prior
- Inventories 46.2 vs 44.3 prior
- Production 50.4 vs 50.3 prior
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