- Best reading since May 2022
- Prelim was 51.9
- Prior was 51.8
- Exports remained a source of demand
weakness,
The ISM manufacturing report is due at the top of the hour and is expected to tick up to 48.5 from 47.9.
Chris Williamson, Chief Business Economist at S&P
Global Market Intelligence
“News of the joint largest rise in factory production since
May 2022 is tainted by reports of ongoing subdued sales
growth. Production growth consequently significantly
outpaced that of new orders at the start of the year,
resulting in a further accumulation of unsold warehouse
inventory.
“Over the past three months, the survey indicates that
factories have typically produced more goods than they
have sold to a degree we have not previously seen since
the global financial crisis back in early 2009. This highly
unusual situation is clearly unsustainable, hinting at
risks of a production slowdown and a potential knock-on
effect on employment, unless demand improves
markedly in the coming months.
“Sluggish sales and order book growth are being
commonly linked to customer resistance to high prices,
in turn often blamed on tariffs, as well as increased
uncertainty over the economic outlook. While just below
trend, business growth expectations for the year ahead
are, however, holding up as firms anticipate improving
demand, thanks in part to lower interest rates, reduced
import competition due to tariffs, and more government
support. However, political uncertainty remains a key
drag on business sentiment.”
The bolded part is a strange one but you can take it as positive or negative.
Earlier, the Canadian PMI for January rose to 50.4 from 48.6.
Commenting on the Canadian survey results, Paul Smith,
Economics Director at S&P Global Market Intelligence
said:
“Following a challenging 2025, PMI data suggested that
Canada’s manufacturing sector started the new year on
a more positive footing. Output stabilised, after nearly
a full year of continuous contraction, whilst confidence
in the outlook improved and marginal jobs growth was
recorded for the first time in 12 months.”
USD/CAD is up 38 pips to 1.3650 today.
This article was written by Adam Button at investinglive.com.