In January 2025, the U.S. manufacturing sector showed signs of stabilization after a prolonged slump. Both ISM and S&P Global reported improved conditions, with production and new orders rebounding and employment stabilizing. January 2025’s indicators portrayed a manufacturing sector that is no longer contracting and may be at the start of a gradual rebound, even as certain industries lag and companies remain watchful of economic headwinds.
A Month in Data
After 26 consecutive months of contraction, the U.S. manufacturing sector recorded a welcome turnaround in January. According to the latest ISM® report, the Manufacturing Purchasing Managers’ Index (PMI®) climbed to 50.9 percent, up from 49.2 percent in December—a clear signal of expansion. Key subindexes also saw notable improvements:
- New Orders Index: Rose to 55.1 percent, moving further into expansion territory after seven months of contraction.
- Production Index: Increased to 52.5 percent, marking a recovery from eight consecutive months of decline.
- Employment Index: Jumped to 50.3 percent, recovering after a prolonged period of contraction.
- Prices Index: Continued to climb, reaching 54.9 percent, indicating that input cost pressures remain elevated.
- Supplier Deliveries: Slowed marginally, while both exports and imports gained momentum, reflecting improving global trade conditions.
It’s notable that both ISM and S&P Global PMIs aligned in January, each signaling a mild expansion in factory activity. While the exact index values differ (50.9 vs 51.2), the overarching data from these agencies show a consistent picture: new orders are rebounding, production is growing again, and employment is no longer contracting, all signs that the manufacturing sector’s downturn has bottomed out.
Any discrepancies between the reports (such as minor differences in the magnitude of improvement) can be attributed to their distinct survey panels and methodologies. Overall, January’s data can be summarized as a welcome improvement in manufacturing fundamentals across the board.
Perspectives Across Reporting Agencies
Both ISM and S&P Global emphasize the significance of the January data. ISM highlighted the recovery in new orders and production as evidence of growing demand and improved operational conditions, while S&P Global pointed to renewed business optimism spurred in part by the incoming administration’s pro-business policies. Industry respondents from diverse sectors—from chemical products citing raw material price increases to transportation equipment firms managing supply chain challenges—shared a common sentiment: conditions are finally shifting in favor of growth.
This convergence of perspectives suggests that although challenges like input cost inflation persist, the overall environment is increasingly supportive of further expansion. Manufacturers are cautiously upbeat, preparing to ramp up capacity and invest in future production even as they monitor the pace of rising prices.
What the Data Means
The improved PMI readings and subindex scores indicate that U.S. manufacturing is on an upward trajectory. With new orders growing robustly and production and employment rebounding, analysts expect this momentum to contribute positively to overall GDP growth in 2025. However, the sustained increase in raw material prices and the persistent need to manage supply chain disruptions serve as reminders that the path to sustained growth will require careful balancing of demand and cost pressures.
The recovery in exports and imports further suggests that global market conditions are stabilizing, offering U.S. manufacturers greater access to international markets. As tariffs adjust and ports operate more smoothly, manufacturers anticipate that these trends will bolster the domestic industry’s competitive edge.
New Factory and Manufacturing Announcements
Despite the recent challenges, manufacturers and related companies have been announcing new investments, factories, and expansions – a sign of confidence in the longer-term outlook and support from industrial policy incentives. January 2025 saw several significant announcements that will bolster U.S. manufacturing capacity in the coming years.
GlobalFoundries: New Advanced Packaging Facility
Semiconductor maker GlobalFoundries (GF) unveiled plans to build a $575 million advanced chip packaging and testing center at its Fab 8 campus in upstate New York. The project will create 102 new high-tech manufacturing jobs over the next five years in New York’s Capital Region. This new facility will perform advanced packaging—a critical step in semiconductor manufacturing that involves assembling and packaging chips with cutting-edge techniques.
Corning Incorporated: Semiconductor Glass Expansion
Corning Inc. announced it is investing up to $315 million to expand its manufacturing operations in Canton, New York, focused on producing specialized glass for the semiconductor industry. This expansion is expected to create approximately 130 new manufacturing jobs at the facility in St. Lawrence County. Corning’s project will support the supply of ultra-pure glass materials used in semiconductor fabrication (for example, glass used in lithography equipment or chip packaging).
GE Vernova: Multi-State Clean Energy Manufacturing Investments
GE Vernova, the energy-focused spin-off of General Electric, announced plans to invest nearly $600 million across several of its U.S. manufacturing sites to expand production of clean-energy-related equipment. This ambitious program is expected to create over 1,500 new jobs in the U.S. manufacturing sector. The investments span facilities that make products like wind turbine components, high-voltage grid equipment, and hydrogen fuel infrastructure.
Each of these announcements contributes to the overall U.S. manufacturing landscape in important ways. They span high-tech semiconductors, aerospace, basic materials (steel), and energy – illustrating the breadth of manufacturing growth areas.
Future Outlook
The trajectory of the industry appears to be one of gradual recovery and cautious growth. Manufacturing is expected to strengthen modestly in the coming months, supported by favorable policy tailwinds (infrastructure spending, tech investments) and a resilient domestic economy. Factories are likely to see continued improvement in orders and output as we progress through 2025, though perhaps with some fits and starts.
We should not be surprised if the PMI oscillates around the low-50s—indicating expansion, but not rapid expansion. Much will depend on whether the January momentum in new orders can be maintained. If it is, manufacturing could even accelerate in the second half of the year. If not, the sector might plateau at a lower growth rate.
If current trends persist, 2025 could be the year manufacturing turns the corner from recovery to modest expansion, helping to sustain the broader U.S. economic growth in the process. The data from January is just one month, but it marks an encouraging start to the year for America’s makers, and many will be watching closely to see if this positive momentum continues into the spring and beyond.
