US Manufacturing Sector Expands for First Time in Over Two Years
In January, the US manufacturing sector witnessed a positive turnaround, expanding for the first time in over two years. The Institute for Supply Management's (ISM) manufacturing Purchasing Managers Index (PMI) rose to 50.9, surpassing the 49.3 reading in December. PMI values above 50 indicate expansion, while values below 50 indicate contraction.
Fundstrat head of research, Tom Lee, views this development as a bullish signal for stocks. Lee highlights the significance of the ISM manufacturing index rebounding and its potential impact on corporate earnings growth in 2025.
Jefferies US economist, Thomas Simons, also expressed a positive outlook for the manufacturing sector. He expects the positive momentum to continue, citing potential interest rate cuts and pro-manufacturing policies from the Trump administration.
Another manufacturing PMI reading from S&P Global released on Monday also indicated growth in the sector. The final reading for January reached 51.2, up from 49.4 in December. S&P Global Market Intelligence chief business economist, Chris Williamson, attributes the optimism to "a new year and a new President."