Jan sees renewed expansion in US manufacturing amid confidence surge

The index moved back above the 50 no-change mark for the first time in seven months in January.

Both output and new orders returned to growth in January, while optimism in the year-ahead outlook for production hit a 34-month high, S&P Global Ratings said in a release.

At least part of the jump in confidence and more buoyant demand picture reflected a sense among firms that business conditions will improve under President Donald Trump.

Meanwhile, input costs continued to increase sharply, leading the pace of output price inflation to accelerate for the third month running to reach the highest since March 2024.

The renewed strengthening of business conditions in large part reflected returns to growth of both new orders and output. New business increased for the first time since June last year amid improving customer demand and greater confidence in the economy.

New export orders continued to fall marginally in January.

Production volumes rose for the first time in six months in January. Although the pace of expansion was modest, the increase represented a marked turnaround from the end of 2024 when output had fallen at a solid pace.

The rise in new orders had been a factor leading to growth of output, while a number of respondents linked the expansion in production schedules to the start of the Trump presidency.

Apart from supporting demand in January, the new US administration also boosted business confidence. Manufacturing sector optimism jumped sharply from the end of 2024, showing the largest monthly improvement in sentiment since November 2020.

Confidence hit a 34-month high as more than half of respondents predicted a rise in manufacturing production over the coming year.

The pace of manufacturing job creation was the highest in the United States in January since June 2024.

Backlogs of work continued to fall as a recent period of subdued demand meant that spare capacity remained in the sector. The pace of depletion slowed sharply and was the weakest in seven months, reflecting the renewed expansion of new orders.

Although firms continued to scale back their purchasing activity in January, the pace of reduction was the weakest in the current eight-month sequence of decline and only marginal.

Stocks of finished goods were also down in January.

ALCHEMPro News Desk (DS)