Manufacturing Expands at Fastest Pace Since June

×
Manufacturing expands at fastest pace since JuneWASHINGTON (AP) - U.S. factories grew in January at the fastest pace in seven months, boosted by a rise in new orders. And builders ended a poor year for construction by spending more on homes and projects for the fifth straight month.

The reports bolster other data showing the U.S. economy started the year strong.

The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its manufacturing index rose last month to 54.1 from 53.1 in December. Readings above 50 indicate expansion.

Consumers are buying more cars and trucks, while businesses ordered more machinery and other equipment. That has driven factory output. The sector has expanded for 29 straight months, according to the index.

A measure of hiring dipped, indicating factories are still adding jobs but at a slower pace than in December. Export orders also rose, a sign that U.S. manufacturers haven't yet been affected by Europe's slowing economy.

Separately, the Commerce Department said spending on construction projects rose 1.5 percent in December, the fifth straight monthly gain. That pushed spending to a seasonally adjusted annual rate of $816.4 billion, the highest level in 20 months.

The gains coincide with other signs that show the troubled housing industry may be improving. Builders are more confident after seeing more interest in homes, and single-family home construction rose in the final three months of last year.

Still, the construction industry remains weak. Spending on all building projects in 2011 was just $787.4 billion. That's 2 percent lower than the previous year and roughly half the level economists consider healthy.

Manufacturing output has jumped in recent months. Auto sales have rebounded from the spring, when Japan's earthquake disrupted supply chains and fewer cars were available on dealer lots.

Businesses also ordered more big-ticket manufactured items in December, the government said last week. And orders for so-called core capital goods, which are a good measure of businesses' investment plans, reached an all-time high last month.

Factory output rose in December by the most in a year, according to the Federal Reserve. Production rose for goods used in the early stages of manufacturing, such as metals, wood products and construction materials. That suggests the output of finished goods will pick up.

Still, U.S. factories are vulnerable to economic shocks.

Exports are likely to decline if Europe suffers a recession, as many predict.

And the key reason the economy grew at an annual rate of 2.8 percent in the final three months of last year was that companies restocked their warehouses. That kept helped drive factory output at the end of last year.

Most economists say that restocking is certain to slow in the first quarter of this year.

Unless consumer spending picks up, businesses won't be able to sell off that extra inventory, and may have to cut back on future orders.

Consumers increased their spending only 2 percent in the final three months of last year. Many have been weighed down by wages that haven't kept pace with inflation.

They need more jobs and higher pay. Hiring has picked up in recent months, but the unemployment rate is still high, at 8.5 percent.

Business spending on equipment and software rose in the final three months of last year, but at the slowest pace since the recession ended, the government said last week.

Most economists expected the combination of weaker inventory growth and tepid consumer spending will lead to slower growth in the January-March quarter. Many are predicting just 2 percent annualized growth in that stretch.

Increase your money and finance knowledge from home

Introduction to Economic Indicators

Measure the performance of the economy.

View Course »

What is Inflation?

Why do prices go up?

View Course »

Add a Comment

*0 / 3000 Character Maximum

52 Comments

Filter by:
Mike

Well its good to be in Colorado where the real conservatives are! Looks like we know a libtard when we see one. Poor lib media just couln't sell us their hand picked loser romney. Now all we need is Mr Cain for VP, Newt for Chief of staff, and R. Paul for treasury sec! Time to clean ALL the libs OUT of the fed govt!

February 08 2012 at 10:40 AM Report abuse rate up rate down Reply
Mike

Cheap energy IS our economy and until it is cheap again their will be no growth just inflation which is not growth no matter how high the spending increases or how badly libtard Oboma kool aid drinkers want it to be. Oil IS the PRIMARY factor to world prosperity, cut and dry! Oil cost increase caused inflation along with massive fed res dollar printing caused inflation means hyper inflation and the end of the dollar. GOT GOLD?

February 07 2012 at 12:28 PM Report abuse rate up rate down Reply
Mike

Worried that the Federal Reserve and the U.S. dollar ARE on the brink of collapse, more than a dozen states have proposed using their own alternative currencies of silver and gold. ---NEW YORK (CNNMoney) -- Lawmakers from 13 states, including Minnesota, Tennessee, Iowa, South Carolina and Georgia, are seeking approval from their state governments to either issue their own alternative currency or explore it as an option. Just three years ago, only three states had similar proposals in place.

"In the likely event of hyperinflation, depression, or the breakdown of the Federal Reserve, State's governmental finances and private economy will be thrown into chaos," said North Carolina Republican Representative Glen Bradley in a currency bill he introduced last year.

Unlike individual communities, which ARE allowed to create their own currency -- as long as it is easily distinguishable from U.S. dollars -- the Constitution bans states from printing their own paper money or issuing their own currency. But it ALLOWS the states to make "gold and silver Coin a Tender in Payment of Debts."

February 04 2012 at 2:48 PM Report abuse +1 rate up rate down Reply
ray

This is bullcrap, it's getting worse.

February 02 2012 at 2:17 PM Report abuse -1 rate up rate down Reply
James Bridges

I love how the Politicians and the Media can Make up Numbers to show that the economy is so good but they can't come up with any proof of these numbers> The Crooks in DC are Being paid by the Lobbyists to Lie and the Media is being paid by the Crooks in DC to back up thier lies

February 02 2012 at 1:33 PM Report abuse rate up rate down Reply
Ranthonyrace

scince June damn i didn't think we made anything in June so anything is a plus

February 02 2012 at 1:11 PM Report abuse rate up rate down Reply
cmcwfc

OMG this is terrible news for the T-Pubs. Looks like they are going to have to change tactics. Their Just say NO is not working.

February 02 2012 at 1:01 PM Report abuse rate up rate down Reply
gmydogbud

Presidents & Congresses of both Parties, Democrat and Republican have Joyfully Taken Money From Big Business & Lobbyists to pass NAFTA & to look the other way, while American Jobs were shipped to China & Other Countries! All this is, is President Obama's Relection Campaign Talk!! The President, Members of Congress, Those In Big Business, Wall Street & Lobbyists, Are All Living VERY WELL & Coulden't Care Less About The American People! It IS TIME FOR A - MIDDLE - CLASS - PARTY - TO - PROTECT - THE - AMERICAN - PEOPLE - AS - THESE - PEOPLE - HAVE - SHOWN - THAT - THEY - WON"T - !!

February 02 2012 at 12:58 PM Report abuse +2 rate up rate down Reply
rebecca jean

youre right bob

February 02 2012 at 12:57 PM Report abuse -1 rate up rate down Reply
rebecca jean

aw looky the press is out shilling for zero...........gotta start the bs early......things arent looking so good for the WON...............................i dont believe for a minute things are better.....been to the groc store lately or bought gas..............................it is all a ruse...................

February 02 2012 at 12:57 PM Report abuse rate up rate down Reply