The Institute for Supply Management released its monthly manufacturing Purchasing Managers Index (PMI) on Feb. 3, reflecting January U.S. industrial activity, which indicated a jump to expansion after 12 straight months of contraction, and the strongest expansion month in 4 years.

The PMI — regarded as a key of U.S. industrial health — showed a January reading of 52.6%, up 4.7 percentage points from December. Economists had expected a January reading of 48.5%. It had declined in each of the previous four months.

It marked the first time that the PMI was in expansion territory — anything above 50.0% or above — since February 2025 (50.0%) and the barometer’s best reading since August 2022 (52.9%).

While the PMI’s overall and subindex readings are positive signs for U.S. manufacturing at the start of 2026, ISM tempered it by noting PMI survey commentary cited that January is a reorder month after the holidays and that some buying appears to be getting ahead of expected price increases amid ongoing tariff pressure.

ISM’s January report was led by major increases in its subindexes for New Orders (+9.7 points to 57.1%) and Production (+5.2 points), while Employment (+3.3), Imports (+5.4),  and New Export Orders (3.4) also saw healthy increases month-to-month. 

Meanwhile, the Suppliers Deliveries index moved up 3.6 points, which indicates a further slowdown in performance — as it’s the only index that is inversed (above 50.0% indicates slower deliveries).

Other notes from the January PMI report:

• At 57.1%, the New Orders index was at its highest reading since February 2022 (59.7%)
• At 55.9%, the Production index was at its highest reading since February 2022 (58.1%)
• At 51.6%, the Backlog of Orders index was at its highest reading since August 2022 (53.0%)

The January ISM report noted that 20% of the manufacturing economy’s GDP contracted in January, compared to 85% in December. Of the six largest manufacturing industries, five expanded in January. Nine total industries reported January growth and eight reported contraction.

January ISM PMI Respondent Commentary

• “ ‘Hope’ has been word of the year in the Transportation Equipment industry. Unfortunately, all the hope in the world has not materialized into order activity in 2025 or the first half of 2026. Across the board, buyers continue to stand on the sidelines. As we enter 2026, every conversation revolves around hope that the second half of 2026 starts the turnaround. It’s hard to set strategy on hope, but thanks to the uncertainty brought about by this administration, here we are.” [Transportation Equipment]
• “Although our volume is low at the moment, the impact on the latest tariff threats on the European Union will have a huge negative impact on our profit for current quoted orders. We will not be able to recover the increase tariffs in our current quotations.” [Machinery]
• “Continuing softness in the market, with December orders below average and buyers reluctant to spend despite beneficial tax policies in the U.S. Geopolitical tensions are fueling ‘anti-American’ buyer sentiment, and sales are being lost.” [Machinery]
• “Another round of emotionally charged tariffs seems imminent, changing the landscape once more. Movement of custom product out of China continues, but the progress is slow with new qualifications required for transitioned materials and assemblies.” [Computer & Electronic Products]
• “Business conditions remain uncertain. Customers are cautious. Broad-based inflation continues. The Supreme Court tariff decision looms.” [Computer & Electronic Products]
• “Growing construction markets, data centers and energy projects, are straining the contract labor availability. The trade tariff uncertainty is creating volatility in the supply chain.” [Food, Beverage & Tobacco Products]
• “A new year, with new challenges. We are moving manufacturing from China to Mexico — which will now impose tariffs on parts made in China. This push for more of a Mexican supply chain and creates some short-term supply management concerns.” [Chemical Products]
• “Confused and uninformed tariff policies continue to plague small companies, making long-term planning pointless. Companies are not making capital commitments beyond 30 days.” [Fabricated Metal Products]
• “Business conditions remain soft as we continue to miss sales, orders and profits as result of increased costs from tariffs, continued fallout from the government shutdown, and increased global uncertainty.” [Miscellaneous Manufacturing]
• “Business trends moving into 2026 feature many of the headwinds from the third and fourth quarters of 2025. While the ‘plane’ has steadied, there continues to be uncertainty and added costs through our global operations. Tariff impacts on our financial performance last year cannot be overstated, as we had a much smaller EBITDA (earnings before interest, taxes, depreciation and amortization) than previous years. While other inflationary pressures continue to hit the business, tariffs and product costs played a large role. This year, we will continue our multi-country sourcing approach to manufacture and import product from more tariff-friendly countries outside of China. But as we know, nothing is guaranteed with the current administration. We have trimmed costs everywhere inside the business, including on labor and conferences, and reduced our revenue forecast to a much more achievable mark. We’re prepared to battle throughout the year for higher profitability.” [Apparel, Leather & Allied Products]