CHICAGO U.S. manufacturing activity expanded in January, with primary metal manufacturers and metal fabricators reporting growth, according to the Institute for Supply Management (ISM).
The purchasing managers index (PMI) for January rose 2.9 percentage points to 53.1, boosted by new order, inventory and employment gains.
"Manufacturing is starting the year on a positive note," ISM manufacturing business survey committee chairman Bradley J. Holcomb said in a statement.
New orders rose 3.6 percentage points, production by 1 point and employment by 2.1 points vs. December, while manufacturers inventories jumped 8 points and customers inventories rose 1.5 points. Exports and imports both declined, as did order backlogs, but all were modest dips.
Hot-rolled carbon steel prices dipped month on month, but cold-rolled steel, stainless steel, aluminum and copper tags rose, survey respondents said. Metal producers said they paid lower prices while fabricators paid more.
Metal producers and fabricators reported a rise in new orders, order backlogs and output in January. But while fabricators were hiring, mills and smelters employment was flat.
Metal producers inventories rose but fabricators reduced inventories last month. Both producers and fabricators deemed their customers inventories were too low. Producers exports fell but fabricators reported growth in new export orders in January.
Respondents to the ISM Chicago chapter survey provided negative views on the months performance. This year "is starting out a tad slower than December 2012. We will be busy, but not to the extent that we were in (the) fourth quarter," one manufacturing purchasing executive said.
"Business is slow out of the gate for 2013," a second executive said.
But the macro take was buoyant. "The January report offered rays of light and hope after months of stagnation. The reading firmed (to) its best score since April 2012," Michael Montgomery, U.S. economist at Lexington, Mass.-based consultancy IHS Global Insight Inc., said. "It has been a long dry spell, with the (index) within two points of neutrality since last spring. That lethargy may be ending, (leading to) hope that the manufacturing sector will rouse from its slumber in 2013."