The Institute for Supply Management index gained to 35.6 in January from 32.9 in December, the group reported yesterday.
Economists polled by Thomson Reuters predicted the index would rise to 32.6.
“January marked 12 months of contraction in the manufacturing sector,” said Norbert J. Ore, chairman of the Institute of Supply Management’s manufacturing business survey committee. “However, the rate of decline as measured by the PMI was slower than experienced in December. ... Comments from our respondents indicate that it will take a recovery in automobiles and housing for the manufacturing sector to once again prosper.
“On a positive note, the prices index continues to indicate significant deflation in the prices that manufacturers have to pay ... and this should ultimately be good for the consumer.”