US factory activity grows for first time in 12 months: survey

US manufacturing activity expanded for the first time in 12 months in January, survey data showed Monday, with improvements in new orders and production -- although businesses remain wary.

The Institute for Supply Management's (ISM) manufacturing index came in at 52.6 percent last month, up 4.7 percentage points from December's figure.

This puts it above the 50-percent level separating growth from contraction in the sector for the first time since February 2025, when the index hit 50.0.


Fueling the uptick was an expansion in new orders for the first time August, while the production index was also its highest since February 2022, ISM said.

"Although these are positive signs for the start of the year, they are tempered by commentary citing that January is a reorder month after the holidays," said ISM survey chair Susan Spence in a statement.

She added that "some buying appears to be to get ahead of expected price increases due to ongoing tariff issues."

President Donald Trump's sweeping tariffs last year might not have caused consumer inflation to surge immediately, but business uncertainty has rocketed, with supply chains roiled as firms sought to avoid sharp hikes in import costs.

While the unemployment rate has leveled off recently as well, many firms have also said they are holding off expansion plans amid fluctuations in the business environment.

Even though the ISM's employment index saw an improvement in January, it remained in contraction, the report said.

"'Hope' has been word of the year in the transportation equipment industry," said a company in the sector.

"Unfortunately, all the hope in the world has not materialized into order activity in 2025 or the first half of 2026. Across the board, buyers continue to stand on the sidelines," the survey respondent added.

Another respondent, in the computer and electronic products sector, said: "Another round of emotionally charged tariffs seems imminent, changing the landscape once more."

The company noted that although businesses are trying to shift the manufacturing of custom products out of China, "progress is slow with new qualifications required for transitioned materials and assemblies."