Production volumes were reported to have increased at a solid pace in January, with the rate of expansion accelerating from December’s recent low. Reports from survey respondents cited improved spending patterns, in particular from domestic clients. Reflecting this, latest data pointed to a rebound in new business growth to its fastest for three months.
Anecdotal evidence suggested that improving U.S. economic conditions continued to boost new business volumes, although a number of manufacturers also noted that reduced capital spending across the energy sector had weighed on demand. At the same time, new export sales increased only marginally in January, with the rate of expansion slower than that recorded for total new work.
Payroll numbers expanded again at the start of the year, but the rate of job creation eased since December and was slightly slower than seen during 2015 as a whole. Some firms indicated that caution about the business outlook had held back staff hiring in January. Meanwhile, manufacturers also reported a slight drop in pre-production inventories and broadly unchanged stocks of finished goods at their plants. Growth of input buying also remained subdued, with the latest rise in purchasing activity the second-slowest recorded over the past two years.
Average cost burdens decreased for the fifth consecutive month in January, although the latest reduction was only marginal. Survey respondents noted that lower commodity prices had generally offset upward pressure on costs from higher salary payments. Factory gate charges nonetheless increased moderately in January, with the latest rise in output prices the fastest since August 2015.