Manufacturing improving
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February 1, 2002: 10:52 a.m. ET
Key gauge posts third straight rise but still short of pointing to growth.
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NEW YORK (CNN/Money) - A key gauge of manufacturing activity rose for the third straight month in January, the nation's purchasing managers said Friday, indicating the troubled sector is poised to pull out of its year-and-a-half long slump.
The Institute for Supply Management said its widely watched index rose to 49.9 from 48.2 in December. Analysts surveyed by Briefing.com had forecast a reading of 50, which points to expansion in the sector. A reading below 50 points to contraction. Manufacturing accounts for about a fifth of the nation's economy.
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It is encouraging that the rate of decline has slowed to its lowest measurable level.
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Norbert Ore ISM chairman |
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"While the manufacturing sector experienced a decline in January, it is encouraging that the rate of decline has slowed to its lowest measurable level," ISM Chairman Norbert Ore said in a statement.
The measure from the group, formerly known as the National Association of Purchasing Management, is watched closely by economists since it offers an early reading on the health of manufacturing. The group surveys purchasing executives who buy everything from cardboard to computer chips for about 350 companies.
Eight industries showed improvements in new orders in January, the group said, including leather, wood and wood products, instruments and photographic equipment, and transportation.
The report came after the government said unemployment fell to 5.6 percent last month, leading many economists to believe that the worst is over for the economy.
On Wall Street, stocks were mixed after the reports.
For more on the Fed and rates, click here
Growth in the nation's economy in the fourth quarter and other signs of recovery prompted the Federal Reserve to hold rates steady after cutting short-term interest rates 11 times last year in a bid to boost consumer and business spending and give the economy a lift.
Manufacturers have been the hardest hit by the downturn in the economy, which slid into a recession in March. But Friday's report and other recent data indicate that the worst may be over for the sector, analysts say.
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