Positive Outlook for US Manufacturing under President Trump
Recent data from S&P Global indicates a positive outlook for US manufacturing industries following President Trump's inauguration.
Manufacturing PMI Rises
The manufacturing PMI (Purchasing Managers' Index) increased to 50.1 in January, surpassing December's 49.4 and marking a seven-month high. Readings above 50 indicate expansion, while readings below 50 indicate contraction.
Output Index Improves
The manufacturing output index rose to 50.2 in January from 47.7 in December, suggesting increased production activity.
Optimism Surges
Chris Williamson, S&P Global's chief business economist, attributed this optimism to expectations of stronger economic growth under the new administration. Manufacturers anticipate support from the Trump administration's policies.
Composite PMI Decline
S&P Global's US composite PMI, which encompasses both manufacturing and services sectors, decreased to 52.4 in January from 55.4 in December due to reduced activity in the services sector. However, Williamson expressed confidence that this decline is likely temporary.
Increased Hiring
The improved business outlook has also boosted hiring, with job creation reaching a 2.5-year high.
Analysts' Attention
Equity strategists are monitoring manufacturing PMI data, including S&P Global's report and the Institute for Supply Management's similar measure, as a potential indicator of future earnings growth. Tom Lee, Fundstrat's head of research, predicts a rise above 50 in ISM's manufacturing number, which may signal an "acceleration of cyclical [earnings] growth."