Slower new business growth was the main drag on the headline index in January. Survey respondents noted that improving economic conditions had boosted sales at the start of the year, but export demand remained subdued. There were also reports from investment goods producers that weaker spending patterns among clients in the oil and gas sector had contributed to weaker new business growth.
Despite a moderation in the pace of new order gains, the latest survey data highlighted an upturn in output growth from December’s 11-month low. Moreover, the increase in manufacturing production during January was the strongest for three months.
Increased production schedules and sustained rises in new work during recent months contributed to a solid pace of job creation across the manufacturing sector in January. Payroll numbers have now risen for 19 consecutive months.
Manufacturers indicated relatively cautious inventory policies at their plants during the latest survey period. Stocks of finished goods and pre-production inventories both increased only marginally in January, while growth of input buying was the least marked for 12 months.
The latest survey indicated a reduction in manufacturers’ average cost burdens for the first time in two-and-a-half years. Anecdotal evidence attributed the slight fall in input costs to lower fuel, energy and commodity prices at the start of 2015. Meanwhile, average prices charged by U.S. manufacturing companies increased marginally, but the rate of inflation was only slightly faster than the seven-month low registered in December.