U.S. manufacturing activity unexpectedly expanded for the first time in several months in January, according to a report released by the Institute for Supply Management on Monday.
The ISM said its purchasing managers index surged up to 50.9 in January after slipping to a revised 47.8 in December, with a reading above 50 indicating growth in manufacturing activity.
Economists had expected the index to show a more modest increase to a reading of 48.5, which would have still indicated a contraction.
With the much bigger than expected increase, the index returned to expansion territory for the first time since July 2019.
The jump by the headline index came as the production index soared to 54.3 in January from 44.8 in December and the new orders spiked to 52.0 from 47.6.
The employment index also climbed to 46.6 in January from 45.2 in December, although the reading below 50 still points to a loss of manufacturing jobs.
On the inflation front, the prices index rose to 53.3 in January from 51.7 in December, indicating prices increased for the second straight month.
“Global trade remains a cross-industry issue, but many respondents were positive for the first time in several months,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Overall, sentiment this month is moderately positive regarding near-term growth.”
The ISM is scheduled to release a separate report on service sector activity in the month of January on Wednesday. The non-manufacturing index is expected to inch up to 55.1 in January from 55.0 in December.