US manufacturing shows growth in Jan for 2nd month

01 February 2013 16:29  [Source: ICIS news]

WASHINGTON (ICIS)--US manufacturing industries saw positive growth in January, a key survey reported on Friday, marking the second straight month of gains after the sector slipped into contraction in November.

In its monthly report, the Institute for Supply Management (ISM) said that its closely watched purchasing managers index (PMI) for last month saw an increase of 2.9 percentage points to 53.1%, up from the 50.2% reading in December and the 49.5% measure initially reported for November.

The PMI is a composite of supplier responses to the ISM’s monthly survey of 10 different business performance measures in 18 major manufacturing sectors.

A PMI reading above 50% indicates the US manufacturing sector is expanding, while an index measure below 50% means production is contracting.

Bradley Holcomb, the institute’s survey chairman, said that January’s PMI reading is a good sign for the new year.

“Manufacturing is starting out the year on a positive note,” he said, pointing out that five of the index’s key component measures – new orders, production, employment, supplier deliveries and inventories – had numbers above 50% in January.

Holcomb said that the subsidiary index for new orders was particularly noteworthy, with that component gaining 3.6 percentage points last month to register 53.3%, suggesting a surge in demand for manufactured goods.

The new orders index had been in negative territory in December with a reading of 49.7%.

Among the 18 industries tracked by ISM, 13 reported growth in January, including plastics and rubber products.

But chemicals manufacturing was one of four industries that reported contraction for the first month of 2013.

An unidentified chemicals industry executive who responded to the ISM survey was quoted as saying that “overall production volume is decreasing, led by a decline in exports of 10%”.

Earlier this week the Commerce Department reported that US gross domestic product (GDP) had no growth in the fourth quarter of 2012, falling into a narrow 0.1% decline.  It was the first negative growth for the nation's economy since the end of the 2008-2009 recession, and the decline was attributed in part to a 5.7% drop in US exports.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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