Manufacturing starts 2012 ‘on a positive note’

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Jan Ism

Economic activity in the manufacturing sector expanded in January for the 30th consecutive month, and the overall economy grew for the 32nd consecutive month, the nation’s supply executives said Wednesday, Feb. 1, in the latest Manufacturing ISM Report On Business.

The PMI registered 54.1 percent, an increase of 1 percentage point from December’s seasonally adjusted reading of 53.1 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy.

The New Orders Index increased 2.8 percentage points from December’s seasonally adjusted reading to 57.6 percent, reflecting the 33rd consecutive month of growth in new orders. A New Orders Index above 52.3 percent, over time, generally is consistent with an increase in the Census Bureau’s series on manufacturing orders.

ISM’s Production Index registered 55.7 percent in January, a decrease of 3.2 percentage points when compared to the December reading of 58.9 percent (seasonally adjusted). This indicates growth for the 32nd consecutive month. An index above 51.2 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

“Prices of raw materials increased for the first time in the last four months,” said Bradley Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “Manufacturing is starting out the year on a positive note, with new orders, production and employment all growing in January.”