Manufacturing Sample Reports Show Solid Pace Of Growth

The manufacturing PMI finished January at the mid-month flash of 54.9, a reading consistent with a solid pace of growth and tangible acceleration from December's 53.8. A soft spot in the report is export sales but weakness here is being offset by strong domestic orders and rising backlogs. Production increased across the sample as did hiring. Cost inflation eased to a 12-month low and business confidence firmed to a 3-month high. This report is very positive and hints at a rebound for January's manufacturing data from the ISM which slowed abruptly in December.

...meanwhile...

Both the manufacturing PMI and the ISM are telling the same story, that growth was solid in January and accelerated from what was a soft December. ISM's composite index rose 2.3 points in January to a 56.6 that is near Econoday's high estimate.

At 58,2, new orders rebounded nearly 7 points following a nearly 11 point drop in December and, like the manufacturing PMI, the strength was centered in domestic markets as export orders slowed to the slowest rate of growth in two years. Production in January was strong for the ISM sample, up nearly 6-1/2 points to 60.5. And sample added to inventories while cost inflation, also the PMI report earlier this morning, flattened noticeably.

Small sample manufacturing reports have been mixed in recent months especially the regional reports some of which have moved into contraction. But today's two reports, not to mention strength at mid-month from the Philly Fed's report, are pointing to a solid 2019 start for the factory sector.