Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee, believes that U.S. manufacturing could return to expansion in the first quarter of 2024. PHOTO courtesy Okuma.
The release of the U.S. Manufacturing ISM Report On Business data for December revealed that U.S factories continue to essentially run in place as they have done for more than a year. But is U.S. manufacturing poised for a comeback as interest rate concerns ease?
Though the composite PMI reading of 47.4 percent slightly beat analysts’ expectations, it indicated a 14th consecutive month of contraction.
Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management Manufacturing Business Survey Committee, reiterated his sentiment that manufacturing could return to expansion in the first quarter of 2024 in a conference call of reporters. But the climb has been taking a long time, prompting Fiore to add: “I’m tired of seeing that PMI number below 50 (percent).”
Supporting Fiore’s optimism is the fact that much of the information for the December ISM Manufacturing Report was collected before the December 13 announcement by the U.S. Federal Reserve that interest rates would remain steady, with three cuts possible this year.
“Companies were going through their business plans and looking at the economic cycle and feeling confident for 2024 would be better,” Fiore said, echoing sentiment indicated in ISM’s Semiannual Economic Forecast released in December.
He continued, “That probably would lead to a spike in new orders at some point. But with the Fed saying it feels good about cutting rates, those that were holding back on making longer term investments have to be (more confident).”