Tech Industry leads US factory rebound

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US factories on rebound large part thanks to tech industry

This January, factories across the U.S. increased their production output to meet rising consumption rates after experiencing notable stalling in the past months.

According to this data report from the Institute for Supply Management’s (ISM), the national Purchasing Managers Index (PMI) moved from a reported 54.3 in December, to 56.6 in January (with any PMI above 50 representing growth, and any smaller representing losses).

This means that over the month there was a percentage increase of 2.3 points, which after December’s lowest reported growth in four years, comes as a refreshing change for the market’s health.

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Tech Industry Bounce Back

In a statement by ISM’s chair of manufacturing business survey committee, Tim Fiore, the company pointed out that December is traditionally the slowest time for manufacturers, and that this 2.3 rebound in PMI is fairly impressive. ISM’s indexes even showed that raw material costs dropped for the first time in nearly three years.

One sector most responsible for last month’s rebound is the tech industry, which demonstrated January PMI levels that reached into the high fifties. However, this directly follows December’s significant drop of 10 points in the tech industry’s PMI, where every index related to its manufacturing saw a loss.

If anything, this highlights how massively impactful the U.S. tech industry is on the nation’s factory activity.

Tariff Strangling Exports

The U.S.-China trade war persists, and there’s a lot of uncertainty about when, or how, it’s finally going to end.

Until then, tariff concerns continue to bring U.S. export growth to a halt, with expansion at its lowest rate since early 2016. For the tech industry, and especially electronic manufacturers, these tariffs are preventing access to necessary foreign resources and drying up supply chains.

If these issues remain a concern as consumer activity continues to rise, then U.S. electronic components are expected to fall in short supply.