U.S. Manufacturing Sector Expands in January

'Manufacturing activity adds to a volume of evidence on the factory sector's role as a stabilizing force for a still weak and uncertain U.S. economic rebound,' said MAPI.

Pulled along by a surge in the growth of new orders, the manufacturing sector picked up its pace in January. The Institute for Supply Management's manufacturing index rose to 54.1 from 53.1 in December.

The new orders component jumped to 57.6 from 54.8, while inventories continued to contract, though just barely.

But raw materials prices were also on the march, the sub-index rising to 55.5 from 47.5 in November, when prices were declining.

"The unequivocally positive January report on U.S. manufacturing activity adds to a volume of evidence on the factory sector's role as a stabilizing force for a still weak and uncertain U.S. economic rebound," said Cliff Waldman, economist for the Manufacturers Alliance for Productivity and Innovation (MAPI).

"In its 30th month of expansion, U.S. manufacturing shows steady if somewhat slowing advances," Waldman added. "New orders for manufactured goods accelerated significantly but production slipped by more than the growth in new orders. Employment appears to have moderated a bit.

"Positive readings on the backlog of orders and on export demand certainly suggest few impediments to the persistence of the factory sector's recovery from a deep downturn. Nonetheless, the sluggishness in overall U.S. economic growth, the risks from a difficult economic and financial climate in the Eurozone, and clear signs of a broad slowing in world economic activity all suggest moderate U.S. manufacturing output advances with downside risks throughout much of 2012."

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