TEMPE, Ariz. – The U.S. manufacturing sector shrank again in January, with virtually all manufacturing industries seeing a decline.

The Institute for Supply Management’s January report measured the manufacturing sector at 47.4%, a 1% decline from December and its lowest reading since May 2020.

“The U.S. manufacturing sector again contracted, with the index its lowest level since the coronavirus pandemic recovery began,” said Timothy R. Fiore, ISM chairman. “With panelists reporting softening new order rates over the previous nine months, the January 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.

“New order rates remain depressed due to buyer and supplier disagreements regarding price levels and delivery lead times; these should be resolved by the second quarter. In the meantime, panelists’ companies are attempting to maintain head-count levels during the anticipated slow first half in preparation for a strong performance in the second half of 2023.”

Of the 18 manufacturing industries recognized by the ISM, just two reported growth. One reported no change, and 15 – including both furniture and wood products – reported a contraction.

New orders fell for the fifth straight month, declining 2.6% in January from December. Not one of the 18 industries reported growth, with both furniture and wood products reporting losses.

Furniture and wood products both saw declines in production. Just one industry (computer and electronic parts) reported growth.

Employment expanded in January but not by much. Nine of 18 reported a decline in employment, with furniture and wood products among them. In December, furniture had reported employment growth.

Supplier delivery speeds continue to increase, rising for the fourth straight month in January. Furniture and wood products both saw gains.

Regarding inventories, manufacturing is split with nine seeing higher inventories, four staying the same and five seeing a decline. Furniture and wood products were both among those to see a decline.

Furniture was one of seven industries to report that customers’ inventories are too high. Both furniture and wood products also reported lower backlogs.

The prices of raw materials continue to decline, falling 5.1% from December alone. Prices have fallen for four straight months now after 28 consecutive months of increases.

Source: https://www.furnituretoday.com/