The manufacturing sector expanded in January for the first time in a year, with the Institute for Supply Management’s latest Purchasing Managers’ Index reaching its highest point since February 2022.

ISM’s index registered 52.6% last month, up 4.7 percentage points from December, which was the lowest manufacturing activity point in 2025. A PMI index below 50% indicates an industry in contraction.

The five subindexes that make up the PMI — new orders, production, employment, supplier deliveries and inventories — all saw improvement, Susan Spence, chair of the ISM’s Manufacturing Business Survey Committee, said in the report.

Three demand indicators — new orders at 57.1%, backlog orders at 51.6% and new export orders at 50.2% — are also in expansion. Meanwhile, customers’ inventories decreased by 4.6 percentage points to 38.7%, the lowest reading since June 2022 at 35.2%, Spence said in the report. However, the decrease in inventories could be a key reason why the new orders and backlog orders returned to expansion, accompanied by growth in the production index.

The manufacturing sectors that have seen growth and contraction in January 2026 Only 20% of the manufacturing sector is in contraction, compared to 85% in December. A PMI index below 50% indicates an industry in contraction.

Despite the growth, about 40% of the survey responses focused on concerns over the Trump administration’s tariff policies.

Manufacturing employment is still in contraction, although it has improved to 48.1%. The U.S. Bureau of Labor Statistics reported in January that manufacturing employment contracted at a slower pace than in November 2025, with a majority of panelists saying their companies are managing staffing levels rather than hiring.

“For every person hiring, there are still two that are not,” Spence said in a media call on Monday. However, she added that employment could turn around depending on whether the new orders and production indices remain in expansion.

Some survey respondents have said they’re seeing post-holiday ordering in January to restock shelves. Other respondents said they believe customers are getting ahead of tariffs and, in some cases, are expecting more orders, depending on the Supreme Court’s ruling on the duties. The nine justices heard oral arguments in November focused on the scope of presidential power, the meaning of statutory language and the constitutional limits on imposing tariffs.

By: DocMemory
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