U.S. manufacturing activity slowed slightly in January, while measures of factory-paid prices for raw materials jumped to a 10-year high. This strengthens expectations that inflation will increase this year.
The Institute for Supply Management (ISM) reported that the manufacturing activity index fell to 58.7 in January from a reading of 60.4 in December. The reading strayed from the expectations of economists targeting a reading of 60.0.
A reading above 50 indicates that the services sector is growing while a reading below 50 indicates contraction. The manufacturing sector is driven by high demand in goods such as electronics and furniture as most laborers work from home following the Covid-19 pandemic.
However, long-term manufactured goods expenditure declined for two consecutive months in December.
The distribution of vaccines expected to be widely distributed by the end of the first quarter is expected to increase spending on services. The manufacturing jobs survey rose to 52.6 from 51.7 in December. This raises expectations in hiring in January after layoffs begin in December.
The US dollar index continues to strengthen to the 90.823 exchange rate with a strengthening of 0.31%.
