US Manufacturing Sector Surges Back to Growth in January

A surge of new orders and jump in production pushed activity in the U.S manufacturing sector higher than expected in January.

The Institute for Supply Management said on Monday that its index of factory activity rose to a reading of 50.9 last month, the highest level since July. December’s figure was revised up to 47.8 from 47.2

This was the first reading above 50, indicating an expansion in the sector, in five months. Economists had forecast the contraction to continue with a reading of 48.7.

The ISM’s new orders gauge, which is a predictor of future activity,  jumped to a reading of 52.0 last month, the highest since May. The production index registered 54.3 percent, up 9.5 percentage points from December. New export orders returned to expansion. The gauge for employment remains in contraction but improved from a month prior.

An economist for the Institute for Supply Management said that January’s 50.9 reading historically corresponds to 2.4 percent annualized real GDP growth, which would represent an acceleration from last year’s 2.3 percent growth.