U.S. Manufacturing Expands

U.S. Manufacturing Expands

U.S. manufacturing activity expanded in January, marking its first monthly increase after 26 consecutive months of contraction, according to the Institute for Supply Management (ISM). The rebound was driven by rising new orders and a faster pace of production, though employment continued to contract and prices remained elevated.

ISM’s manufacturing index, which tracks several indicators based on surveys of corporate purchasing managers, rose to 52.6 in January—up 4.7 percentage points from December. Readings above 50 signal expansion.

Production increased for a third consecutive month, while the employment index rose 3.3 percentage points. Still, hiring remains subdued. “Sixty-six percent of panelists continue to report that managing head counts is the norm at their companies rather than hiring,” said Susan Spence, chair of ISM’s Manufacturing Business Survey Committee.

Improving manufacturing conditions are also beginning to support new industrial development. Rail operator Norfolk Southern, which has a pending merger with Union Pacific, said its customers advanced more than 60 development projects nationwide in 2025. The projects, valued at $7.7 billion, involve new or expanded rail-served industrial facilities. The company expects additional long-term investment announcements in 2026.