U.S. manufacturing sees growth as business optimism climbs to 34-month high

After a rough few years for the manufacturing and business sector under the Biden Administration, there is new optimism for a huge rebound in the next one to two years. The U.S. manufacturing sector expanded in January, the first growth after more than two years of contraction. this is now fueling optimism for a big year ahead, especially as President Trump takes the reins with more pro-business friendly policies.

The Institute for Supply Management (ISM) reports that their manufacturing purchasing managers index (PMI) rose to 50.9 percent, up from 49.2 percent in December. For context in that survey, a number over 50 percent indicates expansion.

Tim Fiore of the ISM survey committee says this optimism means more than just happy feelings; it matters for the bottom line.

"Without positive business optimism, you most likely are not making any investments, not just in people, but in capital and inventory," he says.

S&P Global also reported their manufacturing PMI went up to 51.2 in January, up about 0.8 points from December. That was the first time in seven months that gauge rose over 50.

President Trump has also indicated numerous times he plans to focus on America first and bring manufacturing back to what it used to be. Combined action with optimism, and you have the room for a bit of a boom in 2025.

"We are planning on growing by about 4 percent on the top line in 2025, compared to what was less than 1 percent in 2024," he says. "We had 28 months of contraction post-pandemic...that is the longest period of contraction we have had in 20 years."

Fiore adds that some de-staffing taking place has helped the rebound, as some factories were way overstaffed.

But it is not a simple size fits all solution to just have hope. It certainly plays a part, but there is still leftover stagnation of the economy from the epic failure that was Bidenomics.

Inflation and interest rates are still running high, even as the Fed tries to force-lower rates to bring some relief. Fiore says that a little bit of price relief is expected in the coming months. But a lot of the potential growth rests with the Fed, and how they handle both rates, and inflation moving forward.

Either way, compared to the Biden years, manufacturing is set to build the foundations for a comeback in 2025.