ISM manufacturing index falls to worst level in 12 months

The Institute for Supply Management's manufacturing index fell from 55.1% in December to 53.1% in January, marking the worst performance 12 months

Nevertheless, even at that lower level the index has still, historically, been consistent with GDP growth of close to 2% annualised.

"This decline is no reason too panic, particularly not since the firms in this sample include a lot of the big export-orientated manufacturers that we would expect to be hit hardest by the dollar's surge," said Paul Ashworth, chief US economist at Capital Economics.

"In contrast, the slump in energy prices and the resulting surge in households' purchasing power will mostly benefit smaller domestically focused firms in the services, particularly retail, and construction sectors."

The new orders index fell to from 57.8 to 52.9 in January, while the employment index fell only from 56.0 to 54.1, and still points to solid gain in manufacturing employment.

"All things considered, this decline in the manufacturing index doesn't change our view that overall GDP growth will be close to 3% annualised over the first half of this year," added Ashworth.