U.S. ISM PMI Hits 4-Year High Above 52%, BTC Price Climbs

The manufacturing activity in the U.S. moved back to growth levels in January because the ISM Manufacturing PMI surged to 52.6%, far exceeding the market expectations of 48.5%. Bitcoin (BTC) reacted favorably to the data, as its price increased shortly after the report was published.

ISM Data Comes Above 52%, Providing a Boost for BTC Price

In their January report, the Institute for Supply Management (ISM) stated that manufacturing had grown in 12 months for the first time. According to ISM, the most important elements of the index all saw improvements in January. The Index of New Orders soared to 57.1 as compared to 47.4% in December and was the highest point it had reached since February last year.

Production Index is now at 55.9%, indicating the third consecutive month of output growth. The PMI increased by 4.7 percentage points over December, which was 47.9%, indicating intense new orders and production activity.

Susan Spence, who chairs the ISM, explained that the recovery is due to better demand conditions. Manufacturing activity in the United States returned to expansion territory in January, with all five subindexes that comprise the ISM PMI reporting an improvement, Spence said in the official release.

At a high of 59.0%, the Prices Index indicates that input costs, such as metals, remain elevated for U.S. manufacturers. Additionally, supplier deliveries declined to 54.4%, which is typical in ecosystems with higher demand. Employment was also in contraction at 48.1% but has grown compared to the 44.8% in December.

There was a rapid reaction to the surprise upside print in the financial markets. In its market commentary, Milk Road Macro wrote: “ISM Manufacturing has just beaten, 52.6 vs. expected 48.5.”

It stated that these kinds of readings have been associated with more robust risk asset performance, such as crypto. Milk Road Macro also added that when ISM readings are well above 50, it always boosts the prices of risk assets such as BTC.

Bitcoin Climbs Following Macro Data

The Bitcoin price traded bullishly following the release of the PMI figures. It was up 2.76% in the last day, per data from TradingView. In contrast, it has declined by almost 9% over the past week. The flagship crypto had also notably dropped to as low as $75,000 yesterday, marking a new yearly low.

Technical analyst Kevin Capital noted that the ISM PMI came in at 52.6%, showing that the manufacturing sector of the economy is seeing expansion. He added that some people have highlighted a correlation between this macro data and the BTC price. As such, he believes that this is something to keep an eye on. 

In an X post, CryptoMitchX pointed out that Bitcoin generally performs well during this period since expansion times often correspond to an increase in liquidity and risk-on mood. He also noted that this growth may lead to Bitcoin bull runs similar to those in 2016-2018 and 2020-2021.