Economic Snapshot: Manufacturing sector contracts for fourth consecutive month

Economic activity in the manufacturing sector contracted in January for the fourth consecutive month, while the overall economy grew for the 80th consecutive month.

ISM manufacturing

The ISM Manufacturing Index registered 48.2 percent, an increase of 0.2 percentage points from the seasonally adjusted December reading of 48 percent.

The New Orders Index registered 51.5 percent, an increase of 2.7 percentage points from the seasonally adjusted December reading of 48.8 percent. The Production Index registered 50.2 percent, 0.3 percentage points higher than the seasonally adjusted December reading of 49.9 percent.

The Employment Index registered 45.9 percent, which is 2.1 percentage points below the seasonally adjusted December reading of 48.0 percent. Inventories of raw materials registered 43.5 percent, the same reading as in December.

The Prices Index registered 33.5 percent, the same reading as in December. This indicates lower raw materials prices for the 15th consecutive month.

Eight of the 18 manufacturing industries reported growth in January and 10 industries reported contraction.

ADP employment report

Private sector employment increased by 205,000 jobs in January. Medium businesses contributed the highest number of jobs, adding 82,000 jobs in January, up from December’s upwardly revised 77,000. Small businesses were very close behind with 79,000 job additions, but this is down from December’s upwardly revised 101,000 jobs. Large businesses added 44,000 jobs in January, half of the downwardly revised 88,000 jobs in December.

Service-producing jobs contributed the largest share with 192,000 jobs in January; this is down from an upwardly revised 237,000 jobs in December. Professional/business services contributed 44,000 jobs, down from 69,000 in December. Trade/transportation/utilities grew by 35,000, up slightly from a downwardly revised 33,000 in the previous month. Financial activities added 19,000 jobs, which is the highest level of job gains in that sector since March 2006.

Goods-producing employment rose by 13,000 jobs in January, significantly lower than the upwardly revised 30,000 in December. The construction industry added 21,000 jobs, roughly in line with the average monthly gains in 2015, and the manufacturing sector neither added nor lost jobs.


Real gross domestic product increased at an annual rate of 0.7 percent in the fourth quarter of 2015, according to the first estimate from the Bureau of Economic Analysis, which is based upon less than complete data. In the third quarter, real GDP increased 2.0 percent.

The increase primarily reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment and federal government spending. This was partly offset by negative contributions from private inventory investment, exports and nonresidential fixed investment. Imports, which are a subtraction from real GDP, increased.

Real GDP increased 2.4 percent from the 2014 annual level to the 2015 annual level, matching the rate of the previous year. The increased in 2015 primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, residential fixed investment, private inventory investment, state and local government spending, and exports. Imports increased in 2015.

The price index for gross domestic purchases increased 0.3 percent in 2015, compared with an increase of 1.5 percent in 2014.

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