The overall economy grew for the forty-fourth straight time, while the manufacturing sector expanded for the second month, the Institute for Supply Management reported Friday.
According to the ISM's monthly report on business, the ISM index climbed to 53.1 in January from 50.2 in December.
Economists polled by Thomson Reuters predicted the index would gain to 50.5.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
"The PMI registered 53.1 percent, an increase of 2.9 percentage points from December's seasonally adjusted reading of 50.2 percent, indicating expansion in manufacturing for the second consecutive month," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. "The New Orders Index registered 53.3 percent, an increase of 3.6 percent over December's seasonally adjusted reading of 49.7 percent, indicating growth in new orders. Manufacturing is starting out the year on a positive note, with all five of the PMI's component indexes — new orders, production, employment, supplier deliveries and inventories — registering above 50 percent in January."
The closely watched prices paid index increased to 56.5 from 55.5. The employment index climbed to 54.0 from 51.9 the prior month.
The production index increased to 53.6 from 52.6, the new orders index grew to 53.3 from 49.7; the supplier deliveries index dipped to 53.6 from 53.7; the export orders index slid to 50.5 from 51.5; and the imports index fell to 50.0 from 51.5.
The inventories index rose to 51.0 from 43.0; the customers' inventories index grew to 48.5 from 47.0; and backlog of orders dipped to 47.5 from 48.5.
Respondents' comments included:
"Fiscal cliff, uncertainty in general and EU economic weakness are factors causing our customers to be very tentative with commitments for product purchases in 2013." (Machinery)
"Midwest drought impact will be felt at least through midyear, impacting protein, sweeteners, eggs, oils, emulsifiers, etc." (Food, Beverage & Tobacco Products)
"Slowing interest in high-dollar purchases reflects continuing economic uncertainty." (Miscellaneous Manufacturing)
"Expenditure and investment are expected to remain high in North America in Q1 and Q2, 2013." (Petroleum & Coal Products)
"Housing sales are trending upward in light of overall market uncertainty, translating to improving optimism in appliance market." (Electrical Equipment, Appliances & Components)
"Still waiting for reaction to consumer tax increases." (Fabricated Metal Products)
"Government spending is very low, probably due to the fiscal cliff and the looming debt ceiling." (Transportation Equipment)
"Business is improving." (Furniture & Related Products)
"The general theme developing in our industry is that we can move suitable volumes. However, profit margin is elusive." (Wood Products)
"Overall production volume decreasing. Decrease is led by decline in exports of 10 percent." (Chemical Products)
