Manufacturing activity rebounds

Institute for Supply Management index climbs higher than expected, indicates expansion.

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By Ben Rooney, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- A key index of manufacturing activity registered stronger-than-expected growth in January, according to a survey of purchasing managers in that sector released Friday.

The Institute for Supply Management's (ISM) manufacturing index rose to 50.7, from 47.7 in December. Economists were expecting a reading of 48.8, according to Briefing.com.

The tipping point for the index is 50, with a reading above that reflecting growth in the sector. A reading below 50 represents a decline in manufacturing.

"This represents a return to the recent trend of slow growth in manufacturing, as the PMI has averaged 50.2 percent for the past six months," said Norbert J. Ore, chairman of the ISM's Manufacturing Business Survey Committee, in a statement.

The index unexpectedly declined in December, falling below the tipping point, as slowing demand for products caused a sharp drop in new orders and production.

The ISM said production increased sharply while new orders registered a decline compared to December. Also, the group's employment index softened 1.6 percentage points in January.

Overall, the report is not an indication of recession, according to Michael Darda, chief economist at MKM Partners.

"It's consistent with slow growth but it's not a recession flag," he said. To top of page

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