U.S. Factory Sector Returns to Growth as ISM Index Hits 52.6 in January

The U.S. manufacturing sector recorded unexpected growth at the start of the year, ending a lengthy period of contraction that had weighed on investor sentiment. The Institute for Supply Management’s Purchasing Managers Index (PMI) advanced to 52.6 in January, according to data released Monday. The result contrasts sharply with December’s 47.9 reading and surpasses the 48.9 figure projected by economists surveyed by FactSet.

A PMI reading above 50 signals expansion in manufacturing activity, while a figure below that threshold indicates contraction. January’s 52.6 places the index back in expansion mode and breaks a 10-month sequence of declines that had persisted throughout much of the previous year. The latest report therefore marks the first clear sign of renewed momentum in the factory sector after an extended stretch of weakness.

Investors had been waiting for tangible evidence of a turnaround, and Monday’s release provided it. Market participants had prepared for an uptick, but the scale of the improvement was larger than anticipated. The move from 47.9 to 52.6 constitutes a swing of 4.7 points in a single month, underscoring the abrupt shift from contraction to growth.

The Institute for Supply Management computes the PMI through monthly surveys and issues an annual revision each January. As part of that regular adjustment process, the institute also updated historical data. Following the latest revisions, the organization confirmed that the January 2025 PMI now stands at 50.9, indicating that manufacturing had briefly crossed into positive territory at that time as well. That 2025 reading ended a separate 26-month stretch during which the index had remained below 50.

Monday’s release therefore highlights two turning points: the recently reported January 2026 figure that halts a 10-month slide, and the revised January 2025 figure that disrupted an even longer period of contraction in earlier data. Although the two episodes are distinct, both underscore the sensitivity of the PMI to shifts in factory output, new orders, employment, supplier deliveries and inventories—categories that the ISM evaluates each month.

Economists had set expectations cautiously. The consensus projection of 48.9 implied modest improvement from December yet still pointed to another month of shrinking activity. Instead, the actual outcome confirmed net growth and beat the median forecast by 3.7 points. The gap between forecast and result highlights how swiftly conditions can change, even after nearly a year of downward momentum.

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While the monthly PMI offers only a snapshot, consecutive readings provide insight into broader manufacturing trends. The prior 10 months of contraction, culminating in December’s 47.9, had reinforced concerns about factory-sector weakness. January’s 52.6, however, delivers a numeric signal that production, orders and related components have turned positive. Further readings will determine whether the rebound is sustained or represents a single-month anomaly.

The PMI remains a closely watched barometer for investors, analysts and policymakers. Detailed methodology and historical series are maintained by the Institute for Supply Management, which publishes data and revision schedules on its official website. Additional background can be found through the institute’s public resources (www.ismworld.org).

With January’s report in hand, attention now shifts to upcoming releases that will either confirm a renewed expansion or signal renewed weakness. For the moment, the latest data indicate that U.S. factories have regained forward momentum, ending their most recent contraction streak and providing an early sign of improved conditions in the industrial economy.

Crédito da imagem: Institute for Supply Management