We had projected the ISM PMI to decline in January 2022.
http://sg-stock.blogspot.com/2022/01/us-ism-pmi-declined-in-december-2021-as.html
The prices subindex had increased to 76.1 (+7.9) which was a significant rise because of imported inflation and rising employment costs. However, the high inflation was causing the producers to reduce their inventories to 53.2 (-1.4).
The easing in the supply disruptions helped the producers to increase their imports (55.1, +1.3) and reduce the delay in supplier’s deliveries to 64.6 (-0.3) since a lower number indicated faster deliveries.
The producers reduced their inventories (53.2, -1.4) because they saw reduction in new order (57.9, -3.1), particularly from new local order (Est’d -3.2) because the consumers cut back on their purchases due to high US inflation.
The producers increased their employment (54.5, +0.6) to maintain a slightly lower production (57.8, -1.6) in order to increase their low customers’ inventories (33, +1.3). Subsequently, the continuous reduction in new order had caused the backlog of order to decrease to 56.4 (-6.4) since the producers had fewer orders to fulfill.
All the above factors caused the PMI to decrease to 57.6 (-6.4) in January 2022 and this decline was being projected in our earlier PMI analysis.
In conclusion, the January PMI had indicated that the US economic growth was already over the peak and would experience a continual diminishing marginal GDP growth in the future.
The ISM PMI sub-indices also indicated a weakening PMI in the future and we would like to highlight 2 important sub-indices below.
The new order subindex was showing 75% of the producers didn't expect the orders would rise in the future.
The employment subindex was showing that at least 80% of the producers didn't expect an increase in employment in the future.
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