The recent impressive growth in the US manufacturing sector slowed in January, according to a leading survey.
Sky News reports that the Institute for Supply Management’s purchasing managers index (PMI) fell to 51.3 in January. This followed a figure of 56.5 in January.
Given that figures above 50 indicate expansion in the sector and figure under 50 indicate contraction, the result shows that the industry is still growing but at a slower rate than previously.
This was the second consecutive month of slowing. Many analysts expected some slowing and claimed the previous strong growth was unsustainable. However this drop was larger than expected.
Employment growth slowed, and both inventories and customer inventories contracted at a faster pace than in December.
In addition, new orders dropped from 64.4 in December to 51.2 in January. And production went from 61.7 in December to 54.8 in January.
Reuters reports that the slowing in the manufacturing sector contributed to a drop in the stock market. On Monday, the S&P 500 experienced its largest fall since June as investors avoided riskier assets.
The Wall Street Journal quotes Millan Mulraine, deputy head of US research and strategy at TD Securities as saying that the report “offers a sobering glimpse on the weakening in growth in recent months, confirming the souring tone in other important economic indicators.”
He added that the large drop for January could be partly explained by the harsh winter weather.