The January ISM manufacturing PMI turned out better than expected, as the reading returned to expansion after 26 consecutive months in contraction.
Analysts had expected the index to hold steady at 49.3 for the month, but the actual result came in at 50.9 thanks mostly to gains in new orders, prices and employment.
Key Takeaways:
- January ISM manufacturing PMI up from 49.3 to 50.9 vs. 49.3 consensus
- New orders component up from 52.1 in December 2024 to 55.1 in January 2025
- Prices index up 2.4 percentage points to 54.9
- Employment index up 4.9 percentage points to 50.3
Link to official ISM manufacturing PMI (January 2025)
However, underlying data also revealed that supplier deliveries had slowed during the month and that customer inventories are declining.
Chair of the Institute for Supply Management Timothy Fiore acknowledged that “Demand clearly improved, while output expanded and inputs remained accommodative.”
Market Reactions
U.S. Dollar vs. Major Currencies: 5-min
Overlay of USD vs. Major Currencies Chart by TradingView
The Greenback, which already had been cruising lower leading up to the release of the ISM manufacturing PMI, had a mostly bearish initial reaction to the actual results as the upside surprise likely stoked risk appetite further.
Only USD/JPY saw immediate gains upon seeing stronger than expected headline data, with the pair extending its gradual climb until the end of the session.
Against the rest of its counterparts, USD pulled slightly higher then proceeded to move sideways in the hours after the report was released, before taking another turn lower as risk-on vibes likely picked up on Trump’s decision to pause tariffs on Canada and Mexico.
