NEW YORK - The overall economy grew for the ninth straight time after seven months of contraction, while the manufacturing sector expanded for the sixth time after eighteenth months of contraction, the Institute for Supply Management reported this morning.
According to the ISM’s monthly report on business, the ISM index gained to 58.4 in January from 54.9 in December.
Economists polled by Thomson Reuters predicted the index would rise to 55.5.
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 manufacturing sector grew for the sixth consecutive month in January as the PMI rose to 58.4 percent, its highest reading since August 2004 when it registered 58.5 percent," said Norbert J. Ore, chair of the Institute of Supply Management's manufacturing business survey committee. “This month's report provides significant assurance that the manufacturing sector is in recovery. Both the New Orders and Production Indexes are above 60 percent, indicating strong current and future performance for manufacturing. This month, 13 of 18 industries reported growth, up from nine industries last month, and this is a good indication that the impact of the recovery is expanding.”
The closely watched prices paid index rose to 70.0 from 61.5. The employment index was at 53.3, up from 52.0 the prior month.
The production index increased to 66.2 from 59.7, the new orders index rose to 65.9 from 64.8; the supplier deliveries index climbed to 60.1 from 56.8; the export orders index increased to 58.5 from 54.5; and the imports index grew to 56.5 from 55.0.
The inventories index increased to 46.5 from 43.0; the customers’ inventories index slid to 32.0 from 35.0; and backlog of orders rose to 56.0 from 50.0.
Respondents’ comments included:
"Commodity prices are moving up again." (Printing & Related Support Activities)
"We now believe that we will not have a good upturn until the 3rd quarter of 2010." (Primary Metals)
"Overall activity is significantly higher than we typically see this time of year." (Machinery)
"Orders from automotive very strong." (Electrical Equipment, Appliances & Components)
"Lead times continue to be a problem for electronic components." (Computer & Electronic Products)
