The Institute for Supply Management's (ISM's) purchasing managers' index (PMI) rose to 54.1% in January, one percentage point higher than the 53.1% level seen in December.

While the consensus estimate was looking for a reading of 54.5%, this was still an eight-month high and indicates the 30th consecutive reading above 50%, the threshold which suggests an expansion rather than a contraction.

The new orders index rose from 54.8% to 57.6%, the highest reading since April 2011 and "particularly encouraging", according to Barclays Capital analyst Peter Newland.

The production index fell from 58.9% to 55.7% but Newland said this "likely reflects a playing out of the swing in inventory levels at the end of last year." The employment index fell from 54.8% to 54.3% and the price index rose jumped from 47.5% to 55.5%.

"All in all, a positive report - the increase in new orders suggests solid output growth in coming months and the dip in the production level is likely indicative of the recent mini-inventory cycle, rather than a notable drop in demand," Newland added.

According to Bradley Holcomb, chair of the ISM's Manufacturing Business Survey Committee, said: "Manufacturing is starting out the year on a positive note, with new orders, production and employment all growing in January."

BC

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