US: ISM Manufacturing PMI declines to 47.4 in January vs. 48 expected

• US ISM Manufacturing PMI fell more than expected in January.
• US Dollar Index stays in negative territory below 102.00.

The economic activity in the US manufacturing sector continued to contract at an accelerating pace in January with the ISM Manufacturing PMI dropping to 47.4 from 48.4 in December. This reading came in below the market expectation of 48.

Underlying details of the report revealed that the Employment Index edged slightly lower to 50.6 from 50.8 and the Prices Paid Index climbed to 44.5 from 39.4. Finally, the New Orders Index slumped to 42.5 from 45.1.

Commenting on the survey's findings, "the US manufacturing sector again contracted, with the Manufacturing PMI at its lowest level since the coronavirus pandemic recovery began," noted Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee.

"With Business Survey Committee panelists reporting softening new order rates over the previous nine months, the January composite index reading reflects companies slowing outputs to better match demand in the first half of 2023 and prepare for growth in the second half of the year," Fiore further noted.

Market reaction

The US Dollar Index staged a modest rebound with the initial reaction and was last seen losing 0.25% on the day at 101.83.