Industryweek 3635 Manufacturing

US Manufacturing Picks Up in January

Feb. 1, 2013
January's rebound included an 8% surge in the inventories sub-index and a 3.6% gain for new orders.

WASHINGTON -- U.S. manufacturing activity expanded for a second straight month in January as new orders and inventories picked up, the ISM monthly survey showed Monday.

The Institute for Supply Management's manufacturing sector index rose to 53.1 from 50.2 in December.

Until January the index had hovered around the 50 break-even line between growth and contraction for about six months. The overall economy shrank by 0.1% in the fourth quarter of 2012, according to official data, underpinned by little change in the manufacturing sector.

All five of the PMI’s component indices -- new orders, production, employment, supplier deliveries and inventories -- were above 50% in January,

January's rebound included an 8.0 percent surge in the inventories sub-index and a 3.6 percent gain for new orders.

But customer inventories were still contracting, as were manufacturers' order backlogs.

Thirteen of 18 manufacturing industries covered in the ISM survey reported growth in the month, compared with only seven in December.

Those contracting were: nonmetallic mineral products; computer and electronic products; wood products; and chemical products.

But manufacturers polled in the survey suggested they remained worried about the tentative direction of the economy.

"Slowing interest in high-dollar purchases reflects continuing economic uncertainty," said one respondent representing miscellaneous manufacturing.

Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation, however, called the ISM report “very positive.”

“A strong ISM report, combined with the employment numbers for January from the Bureau of Labor Statistics showing a modest 4,000 additional manufacturing jobs, is a good start to the year,” Meckstroth said.

“Despite the political uncertainty over the debt ceiling, sequester, and federal government shutdown deadlines all coming up in the first half of this year, industrial activity continues to grow. All households saw a tax increase in January with the expiration of the 2 percent payroll tax cut, and high income taxpayers faced higher marginal rates and new health care taxes. Despite the headwinds, the strong improvement in housing starts, solid growth in motor vehicle production and widespread modest gains across many industries are driving manufacturing activity.”

Click here to read the full report.

Copyright Agence France-Presse, IW Staff, 2013

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