U.S. Manufacturing Rebounds: ISM PMI Hits 52.6 in January 2026 – First Expansion in Over a Year
- Kelsea Ansfield
- Feb 3
- 3 min read
The Institute for Supply Management® (ISM®) released its January 2026 Manufacturing PMI® Report today, delivering encouraging news for the U.S. industrial sector. For the first time in 12 months, manufacturing activity expanded, with the headline Manufacturing PMI® jumping to 52.6%—a substantial 4.7 percentage point increase from December's seasonally adjusted reading of 47.9%. This marks the end of 26 consecutive months of contraction and signals a potential turning point for the sector.
A PMI reading above 50% indicates expansion in manufacturing, while readings above 47.5% over time typically correspond to overall economic growth. ISM Chair Susan Spence noted that the overall economy has now expanded for the 15th consecutive month, with the January PMI corresponding to an estimated 1.7% annualized increase in real GDP.
Key Subindexes Show Broad Improvement
All five PMI subindexes improved in January, though Employment and Inventories remain in contraction territory:
New Orders Index: 57.1% (up 9.7 points) – First expansion since August 2025, highest since February 2022.
Production Index: 55.9% (up 5.2 points) – Third straight month of expansion, highest since February 2022.
Employment Index: 48.1% (up 3.3 points) – Still contracting (28th month), but improving; headcount management via layoffs and unfilled positions remains common.
Supplier Deliveries Index: 54.4% (up 3.6 points) – Slower deliveries for the second month, typical in recovering demand environments.
Inventories Index: 47.6% (up 1.9 points) – Continued contraction but slower rate.
Additional positive signals include:
Backlog of Orders: 51.6% (up 5.8 points) – Highest since August 2022.
New Export Orders: 50.2% (up 3.4 points) – Back in expansion.
Imports Index: 50.0% (up 5.4 points) – Unchanged after nine months of contraction.
Customers’ Inventories: 38.7% (down 4.6 points) – "Too low" territory accelerated, often a precursor to increased production.
Industry and Commodity Trends
Nine of the 18 manufacturing industries reported growth in January, led by Printing & Related Support Activities, Apparel, Leather & Allied Products, Fabricated Metal Products, Primary Metals, Transportation Equipment, Machinery, Chemical Products, Food, Beverage & Tobacco Products, and Computer & Electronic Products.
Of the six largest manufacturing industries (by GDP contribution), five expanded: Transportation Equipment, Machinery, Chemical Products, Food, Beverage & Tobacco Products, and Computer & Electronic Products. Only 20% of manufacturing GDP contracted in January (down sharply from 85% in December), with strong contraction (PMI ≤45%) dropping to 12% from 43%.
Commodities Up in Price: Aluminum, brass, copper, electronic components, freight, labor, steel (various forms), precious metals, zinc, and more—driven partly by tariffs and supply chain pressures.
Commodities Down: Cooking oils, fuel, gasoline, plastic resins. Short Supply: Electrical/electronic components, labor, memory, rare earths, steel products.
Prices Index at 59% (up 0.5 points) reflects ongoing inflationary pressures, particularly in metals and tariff-impacted goods.
What This Means for Supply Chains and Businesses
The sharp rebound in New Orders and Production, combined with low customer inventories and growing backlogs, points to building momentum in manufacturing demand—possibly fueled by post-holiday replenishment and preemptive buying ahead of tariff escalations. While employment remains cautious, the overall direction is positive for output and orders.
For supply chain leaders:
Demand planning should incorporate potential acceleration in production.
Inventory strategies may shift from aggressive drawdown to modest rebuilding.
Supplier management will be critical amid slower deliveries and persistent price pressures in key inputs like steel and aluminum.
Tariff and trade monitoring remains essential, as export orders show fragility despite the uptick.
At Gain Consulting LLC, we view this PMI expansion as a timely opportunity for clients to reassess sourcing, capacity planning, and risk mitigation strategies. The shift from prolonged contraction to growth underscores the resilience of North American manufacturing and the value of agile, data-driven supply chain approaches.
For deeper analysis of how this ISM data impacts your operations—whether in procurement optimization, nearshoring evaluations, or logistics forecasting—contact Gain Consulting LLC today. We're based in Salt Lake City and committed to helping businesses thrive in evolving economic conditions.
Follow us on X @gainconsulting_ for ongoing insights into freight, manufacturing, and supply chain trends. The full ISM Manufacturing PMI Report is available on the ISM website.
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