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Good Start to the New Year for Manufacturing

Todd Bunton

Although it may get overshadowed by other economic reports this week, Friday's ISM manufacturing report was strong. According to the Institute for Supply Management's survey, economic activity in the manufacturing sector expanded for the second straight month in January.

PMI registered 53.1%, which was well ahead of expectations. This was also an increase from December's reading of 50.2%. A reading above 50 percent indicates that the manufacturing economy is generally expanding.

Within this month's report, the New Orders Index improved to 53.3%, up from 49.7% in December, and indicating growth in new orders in December. Production was also strong, registering 53.6. Of the report's 10 components, only two were below the 50 line: Customers' Inventories and Backlog of Orders.

Overall, this was an encouraging report and a good start to the new year for the manufacturing sector.

To put this report in perspective, take a look at this chart from Calculated Risk Blog that shows PMI over the last 50 years.

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