January 2022 Manufacturing ISM Report On Business Reports Backlog of Orders Index Indicates Incoming Business Remains High

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector grew in January, with the overall economy achieving a 20th consecutive month of growth, say the nation’s supply executives in the January 2022 Manufacturing ISM Report On Business.

Manufacturing grew in January, as the Manufacturing PMI continued to indicate strong sector expansion and U.S. economic growth in January. The Manufacturing PMI registered 57.6 percent, 1.2 percentage points lower than the seasonally adjusted December reading of 58.8 percent.

ISM’s New Orders Index registered 57.9 percent in January, a decrease of 3.1 percentage points compared to the seasonally adjusted 61 percent reported in December. This indicates that new orders grew for the 20th consecutive month.

The Production Index registered 57.8 percent in January, 1.6 percentage points lower than the seasonally adjusted December reading of 59.4 percent, indicating growth for the 20th consecutive month.

ISM’s Employment Index registered 54.5 percent in January, 0.6 percentage point above the seasonally adjusted December reading of 53.9 percent, and this indicates a fifth consecutive month of expansion.

The delivery performance of suppliers to manufacturing organizations was slower in January, as the Supplier Deliveries Index registered 64.6 percent, 0.3 percentage point lower than the 64.9 percent reported in December.

The Inventories Index registered 53.2 percent in January, 1.4 percentage points lower than the seasonally adjusted 54.6 percent reported for December. Manufacturing inventories continued to expand but at a slower rate. Due to supplier labor and transportation issues in January, the end-of-year inventory draw down that occurred in December could not be fully replenished.

ISM’s Backlog of Orders Index registered 56.4 percent in January, a 6.4-percentage point decrease compared to the 62.8 percent reported in December, indicating order backlogs expanded for the 19th straight month. Backlogs expanded at a slower rate in January; however, the index reading indicates incoming business remains high.

The 14 manufacturing industries reporting growth in January — in the following order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Machinery; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Transportation Equipment; Primary Metals; Fabricated Metal Products; Computer & Electronic Products; Chemical Products; Petroleum & Coal Products; and Plastics & Rubber Products. The only industry reporting a decrease in January compared to December is Paper Products.