A widely watched economic gauge showed U.S. manufacturing activity picked up speed in January, growing to its highest level since last June.
The Institute for Supply Management’s Purchasing Managers’ Index for manufacturing registered 54.1, compared with December’s seasonally adjusted reading of 53.1. A reading above 50 indicates expansion.
“Manufacturing is starting out the year on a positive note, with new orders, production and employment all growing in January,” said Bradley J. Holcomb, chair of the ISM’s manufacturing business survey committee.
The ISM’s new orders index rose 2.8 points to 57.6, the fourth straight month-to-month increase in that key measure of future manufacturing activity and the highest point for the index since April 2011. Prices for raw materials rose for the first time in four months.
The manufacturers inventories index registered 49.5, compared with 45.5 in December. The customers’ inventories index was 47.5, compared with 42.5 a year earlier. A reading below 50 indicates customers’ inventories are too low.
Factory output has risen in recent months, aided by an increase in auto sales. The ISM’s production index registered 55.7 in January, below the 58.9 of December is still in positive territory.
Exports also have been growing, with containerized exports in 2011 up 5.8 percent year-over-year. The ISM’s exports index rose to 55 from 53 in December, indicating faster growth. The employment index registered 54.3, down from 54.8 in December, suggesting manufacturers are still adding jobs but at a slower pace.