US manufacturing activity accelerated in January, with production rising at its joint-fastest rate since May 2022, even as new orders grew only modestly and exports remained under pressure, according to the latest S&P Global US Manufacturing PMI survey.
The headline PMI climbed to 52.4 from 51.8 in December, signalling a firmer expansion across the sector. Output increased sharply, but much of the improvement reflected companies building inventories rather than responding to robust sales. New business returned to growth, yet at a pace below the long-term average, while overseas demand contracted for a seventh consecutive month as tariffs and trade uncertainty weighed on orders, particularly from Europe and South America.
Cost pressures intensified during the month. Manufacturers reported that tariffs were pushing up input prices, prompting suppliers to raise charges and leading firms to increase their own selling prices at the quickest rate since last summer.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the strong production figures masked a more fragile picture. He noted that factories had been churning out more goods than they were selling to a degree rarely seen outside the global financial crisis, a trend that could prove unsustainable without a rebound in demand. Sluggish order books, he added, were widely linked to customer resistance to higher prices and ongoing political uncertainty.
Employment rose only modestly, and business confidence remained slightly below trend, though some firms expressed hope that lower interest rates and greater domestic support would bolster activity later in the year.
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