US manufacturing hits five-year high

Factory sector activity in the US reported its best performance in over five years in January, boosting hopes of a growth in overall economic output.  The data, released by private research group the Institute for Supply Management (ISM), provides further evidence that the US economy is continuing to emerge from recession. The ISM said its index of manufacturing activity, also known as the purchasing managers index, moved to 58.4 in JanuaryÔÇöthe best reading since August 2004. The reading was 54.9 in December and 53.7 in November. Readings over 50 indicate growth. Analysts had expected the index to come in at 55.3. The index began to grow once again in August, after declining for 13 consecutive months. Manufacturing activity is widely accepted to lead the broader economy. The ISM said its new orders index hit 65.9, up from December's 64.8, while the production index was 66.2, from 59.7. The factory employment index reached 53.3, up from 50.2 in December, the second straight month of growth and the best performance for that reading since April 2006. A recovery in employment across all industries is considered vital to encouraging consumer spending, which drives the bulk of US output and is the key to self-sustaining recovery. Thirteen of the 18 industries surveyed reported growthÔÇöup from nine industries last month, a strong indication that the recovery is beginning to spread. Growth leaders included apparel, textile machinery and transportation equipment industries, with furniture being the only industry reporting a contraction. Manufacturing has led the broader economic recovery that began in the third quarter of 2009, after 12 months of contraction in gross domestic product (GDP).