Manufacturing rises after five-month contraction
A five-month contraction in the manufacturing industry ended in January, according to the Institute for Supply Management.
The monthly Manufacturing ISM Report On Business found manufacturing in positive territory for the first time since July, with the index at 50.9 percent, 3.1 points above December. Readings below 50 indicate the sector is shrinking.
The survey found an uptick in new orders and a move to fill up depleted inventories. A measure of backlogged orders, however, continued contracting for the ninth month in a row.
Trade remained a central issue.
“Global trade remains a cross-industry issue, but many respondents were positive for the first time in several months,” said Timothy Fiore, the chairman of the group.
Manufacturing was strongest in the area of food, beverage and tobacco products, as well as computer and electronic products. Petroleum and coal products was the weakest sector in the report, remaining in contraction alongside about half of all manufacturing industries.
The news helped push stocks up Monday morning. The Dow Jones Industrial Average was up 350 points in morning trading, reversing a steep, 600-point drop on Friday on fears of the spreading outbreak of the Wuhan coronavirus.
The turnaround will be likely be noted by President Trump as he makes the economy a central pitch in his November reelection bid. Trump campaigned on reviving American manufacturing, which is a key industry in swing states such as Wisconsin, Pennsylvania and Michigan.
But continued contraction in specific subsectors such as coal, machinery, textiles and transportation equipment could temper enthusiasm as Trump’s trade war with China drags on and attempts to contain the coronavirus impede travel.
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