January Manufacturing PMI Falls Further to 47.4% - Modern Distribution Management

January Manufacturing PMI Falls Further to 47.4%

It was the index's ninth straight month of decline, and third straight in contraction territory.
U.S. manufacturing profits 3Q 2021

The Institute for Supply Management’s monthly Purchasing Managers Index (PMI) — a well-regarded barometer of the U.S. industrial economy — contracted further in January as it continues to set and reset its lowest mark since the height of the COVID-19 pandemic.

The January PMI mark of 47.4% was a full percentage point lower than December and the lowest reading since May 2020’s 43.5%. November 2022’s reading (49.0) snapped 29 straight months of expansion (anything above 50.0 or above). 

January was the index’s ninth consecutive month-to-month decline.

After carrying strong momentum to the end of 2021 and holding in the high 50s the first couple months of 2022, the PMI has steadily decreased since. It slid to 53.0 in June and 50.9 in September and has only fallen further. A year earlier, December 2021’s PMI registered at 59.9.

“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,” commented Timothy Fiore, CPSM, C.P.M. and chair of the ISM Manufacturing Business Survey Committee.

Month Manufacturing PMI Month Manufacturing PMI
Jan 2023 47.4 July 2022 52.7
Dec 2022 48.4 June 2022 53.1
Nov 2022 49.0 May 2022 56.1
Oct 2022 50.0 April 2022 55.9
Sept 2022 51.0 March 2022 57.0
Aug 2022 52.9 Feb 2022 58.4
Average for 2022’s 12 months – 52.7; High – 58.4; Low – 47.4


Of the PMI’s 10 factoring indexes, only two ended January in expansion territory. Five of them saw month-to-month declines in January, with four of them of at least half a percentage point: 

  • New Orders fell 2.6 points to 42.5%; 
  • Production fell 0.6 points to 48.0%; 
  • Employment dipped 0.2 points to 50.6%; 
  • Inventories fell 2.1 points to 50.2%; and 
  • Customers’ Inventories fell 0.8 points to 47.4%. 

Gaining from December were: 

  • Supplier Deliveries, up 0.5 points to 45.6%; 
  • Prices, up 5.1 points to 44.5%; 
  • Backlog of Orders, up 2.0 points to 43.4%; 
  • New Export Orders, up 3.2 points to 49.4%; and 
  • Imports, up 2.7 points to 47.8%
Index Series Index Jan Series Index Dec Percentage Point Change Direction Rate of Change Trend* (Months)
Manufacturing PMI® 47.4 48.4 -1.0 Contracting Faster 3
New Orders 42.5 45.1 -2.6 Contracting Faster 5
Production 48.0 48.6 -0.6 Contracting Faster 2
Employment 50.6 50.8 -0.2 Growing Slower 2
Supplier Deliveries 45.6 45.1 +0.5 Faster Slower 4
Inventories 50.2 52.3 -2.1 Growing Slower 18
Customers’ Inventories 47.4 48.2 -0.8 Too Low Faster 76
Prices 44.5 39.4 +5.1 Decreasing Slower 4
Backlog of Orders 43.4 41.4 +2.0 Contracting Slower 4
New Export Orders 49.4 46.2 +3.2 Contracting Slower 6
Imports 47.8 45.1 +2.7 Contracting Slower 3
OVERALL ECONOMY Contracting Faster 2
Manufacturing Sector Contracting Faster 3

ISM noted that, of the six biggest manufacturing industries, only one — Transportation Equipment — registered expansion in January, albeit weak. None of the 18 industries ISM tracks reported growth in new orders, following three in December. Seventeen of them reported a month-to-month decline in new orders, in the following order: Wood Products; Textile Mills; Apparel, Leather & Allied Products; Paper Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Machinery; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Chemical Products; Computer & Electronic Products; and Transportation Equipment.

“Uncertainty regarding future demand, buyer/supplier disagreements on prices and lead times, and hangover from overordering in 2021 and 2022 continue to weigh heavily on the index,” Fiore said.

“Price and lead time declines as well as backlog contraction should encourage buyers to reenter the market and sales agents to be more aggressive in seeking new business, but clearly this did not occur in December,” Fiore said. “Slowing in new order rates to adjust for overordering in 2021 and the first quarter of 2022 has been underway since March of this year.”

On the production side, only one industry in the top six — Computer & Electronic Products — expanded in January, compared to four in December. Fourteen of the 18 industries ISM tracks reported a decrease, and three reported no change.

For employment, five of the 18 tracked industries reported growth: Nonmetallic Mineral Products; Machinery; Plastics & Rubber Products; Transportation Equipment; and Fabricat3d Metal Products. Nine industries reported a decrease, and four reported no change.


ISM’s January Report on Business included a selection of commentary across the 18 industries it tracks:

  • “Business is still strong, but we have begun to see softening in some pricing, and lead times seem to be improving.” [Computer & Electronic Products]
  • “Conditions are reasonable. Sales are a little better than planned. Cost pressures are easing for most products. There have been a lot fewer supply disruptions so far this year, and few expected in the short term. The crystal ball remains a little blurry for the rest of 2023.” [Chemical Products]
  • “Sales have dropped (as expected) at the beginning of the year. Forecast from the sales department is showing even lower sales then we expected. If this holds true, inventory levels will rise slightly over next month and a half.” [Food, Beverage & Tobacco Products]
  • “Supply chain issues continue to plague our production schedules. Transportation from our overseas suppliers is also contributing to delays. Lead times have doubled for critical electronics, gaskets, sealants, and specialized steel.” [Transportation Equipment]
  • “Strong big ag demand continues to drive heightened demand for parts. Large construction/off highway original equipment manufacturers have strong demand as well. Creating continued capacity constraints with the supply base.” [Machinery]
  • “Some business segments showing demand softening globally. Many materials showing improved lead times as well as cost deflation.” [Electrical Equipment, Appliances & Components]
  • “Thus far, the outlook for the first half of 2023 looks very soft. Demand for our products has taken a sharp downward turn. Our inventories are high, as well as our customers’. It seems everyone is bracing for a recession.” [Fabricated Metal Products]
  • “Customers are being quite aggressive in pursuing price decreases, far beyond the price relief we are actually receiving from our suppliers.” [Miscellaneous Manufacturing]
  • “Industrial construction is strong. Commercial construction is slower.” [Nonmetallic Mineral Products]
  • “In the past two weeks, we are seeing a slowing of new orders.” [Primary Metals]

Related Posts

Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.


articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events



You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.