The S&P PMI manufacturing index posted 51.2, up from the mid-month flash estimate of 50.1 and above the 50-growth threshold for the first time in 7 months. This signals that the manufacturing economy is not only expanding, but is expanding at a faster rate than earlier in the month. This implies that the latter half of January outperformed the earlier half. At 51.2 the PMI manufacturing index is larger than both the consensus estimate (50.1) and December's final (49.4).

This can be attributed to growth in new orders and output. New business increased for the first time since June 2024. Production volume also increased for the first time in 6 months.

After plummeting in December, business sentiment rose to a new peak. Its highest since November 2020. Confidence in the upcoming year also hit a 34-month high as businesses predict a rise in manufacturing production.

Backlogs continued to fall, however, with the expansion of new orders, the pace of backlog depletion was the slowest in 7 months.

Due to the recent period of weakened demand, many businesses continued to scale back their purchasing activity but still, some found that their current input was sufficient to deal with the increased new orders. Delivery times lengthen for the fourth consecutive month possibly due to staff shortages and extreme weather conditions such as the wildfires in California.

Input costs continued to increase in January with the pace of inflation unchanged from December. This led to manufacturers raising their selling price to keep up with rising costs.

No revision from the flash at 50.1 is the call.

Based on monthly questionnaire surveys of selected companies, the Purchasing Managers' Manufacturing Index (PMI) offers an advance indication on month-to-month activity in the private sector economy by tracking changes in variables such as production, new orders, stock levels, employment and prices across manufacturing industries. The final index for the current month is released roughly a week after the flash.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the Markit PMIs in the U.S. and elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.

Markit originally began collecting monthly Purchasing Managers' Index (PMI) data in the U.S. in April 2004, initially from a panel of manufacturers in the U.S. electronics goods producing sector. In May 2007, Markit's U.S. PMI research was extended out to cover producers of metal goods. In October 2009, Markit's U.S. Manufacturing PMI survey panel was extended further to cover all areas of U.S. manufacturing activity. Back data for Markit's U.S. Manufacturing PMI between May 2007 and September 2009 are an aggregation of data collected from producers of electronic goods and metal goods producers, while data from October 2009 are based on data collected from a panel representing the entire U.S. manufacturing economy. Markit's total U.S. Manufacturing PMI survey panel comprises over 600 companies.