NEW YORK – U.S. manufacturing increased in January, reaching its highest level since May 2004, according to the Institute for Supply Management.
The overall economy grew for the twentieth straight time, while the manufacturing sector expanded for the eighteenth time, ISM reported Tuesday.
According to the ISM’s monthly report on business, the ISM index surged to 60.8 in January from 58.5 in December.
Economists polled by Thomson Reuters predicted the index would slip to 58.0.
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 continuing strong performance is highlighted as January is also the sixth consecutive month of month-over-month growth in the sector," said Norbert J. Ore, chair of the Institute of Supply Management's manufacturing business survey committee. “Global demand is driving commodity prices higher, particularly for energy, metals and chemicals.”
The closely watched prices paid index grew to 81.5 from 72.5. The employment index was at 61.7, up from 58.9 the prior month.
The production index increased to 63.5 from 63.0, the new orders index rose to 67.8 from 62.0; the supplier deliveries index jumped to 58.6 from 56.7; the export orders index increased to 62.0 from 54.5; and the imports index rose to 55.0 from 50.5.
The inventories index increased to 52.4 from 51.8; the customers’ inventories index grew to 45.5 from 40.0; and backlog of orders increased to 58.0 from 47.0.
Respondents’ comments included:
“Continued weakness in the dollar is having a negative effect on the components we purchase overseas and increasing our material costs.” (Transportation Equipment)
“Lead times are increasing significantly, and commodity pricing is starting to increase.” (Chemical Products)
“January/February sales will be decent, and we see a strong March. We’re cautiously optimistic but reluctant to hire.” (Fabricated Metal Products)
“Business is still slow with no pick-up in sight.” (Furniture & Related Products)
“We continue to see unexpected strength in many non-U.S. markets.” (Fabricated Metal Products)
