- Best reading since May 2022
- Prelim was 51.9
- Prior was 51.8
- Exports remained a source of demand weakness,
The ISM manufacturing report is due at the top of the hour and is expected to tick up to 48.5 from 47.9.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence
“News of the joint largest rise in factory production since May 2022 is tainted by reports of ongoing subdued sales growth. Production growth consequently significantly outpaced that of new orders at the start of the year, resulting in a further accumulation of unsold warehouse inventory.
“Over the past three months, the survey indicates that factories have typically produced more goods than they have sold to a degree we have not previously seen since the global financial crisis back in early 2009. This highly unusual situation is clearly unsustainable, hinting at risks of a production slowdown and a potential knock-on effect on employment, unless demand improves markedly in the coming months.
“Sluggish sales and order book growth are being commonly linked to customer resistance to high prices, in turn often blamed on tariffs, as well as increased uncertainty over the economic outlook. While just below trend, business growth expectations for the year ahead are, however, holding up as firms anticipate improving demand, thanks in part to lower interest rates, reduced import competition due to tariffs, and more government support. However, political uncertainty remains a key drag on business sentiment.”
The bolded part is a strange one but you can take it as positive or negative.
Earlier, the Canadian PMI for January rose to 50.4 from 48.6.
Commenting on the Canadian survey results, Paul Smith, Economics Director at S&P Global Market Intelligence said:
“Following a challenging 2025, PMI data suggested that Canada’s manufacturing sector started the new year on a more positive footing. Output stabilised, after nearly a full year of continuous contraction, whilst confidence in the outlook improved and marginal jobs growth was recorded for the first time in 12 months."
USD/CAD is up 38 pips to 1.3650 today.
