U.S. manufacturing activity returned to expansion in January as the Institute for Supply Management’s Purchasing Managers Index (PMI) rose above the 50 mark that separates contraction from growth.

The PMI increased from December’s level, reflecting stronger new orders and higher production after a slowdown late last year. It marked the first expansion reading in several months and suggested factories are seeing steadier demand at the start of 2026.

“An improving PMI signals growing confidence on factory floors,” said Jacob Sargent, director of public policy services at the Ohio Manufacturers’ Association. “Manufacturers respond quickly to changes in demand, and this data points to renewed momentum early in the year.”

Survey respondents said manufacturers boosted orders and rebuilt inventories in part to manage supply risks and cost pressures tied to tariffs and global trade conditions. Economists said the uptick points to improving momentum as companies adjust to shifting market conditions.

While inflation and trade policy remain important factors, the January reading adds to other signs that manufacturing output is stabilizing after a volatile period in 2025. The data suggest producers are entering the new year with firmer footing and a cautiously optimistic outlook for the months ahead. 2/3/2026