The Institute for Supply Management reported that U.S. manufacturing growth saw its sharpest slowdown in almost three years as national factory activity fell from 56.5 in December to 51.3 in January, the lowest level since last May. More importantly, the key leading indicator for new orders tumbled from 64.4 to 51.2, the sharpest decline sine 1980.
These readings were both above 50, the mark that separates expansion from contraction, but they signaled an abrupt change in trend that has clearly rattled financial markets.
Other readings included a sharp decline in the production index, from 61.7 to 54.8, and a smaller drop in employment, from 55.8 to 52.3.
Inventories and backlogs contracted at a faster pace than the month prior and the prices paid component jumped from 53.5 to 60.5 in what was about the most negative report imaginable for a manufacturing sector that is still expanding.