NEW YORK The pace of growth in the U.S. manufacturing sector picked up in January to its highest level in nine months as new orders and employment improved, according to an industry report released on Friday. The Institute for Supply Management (ISM) said its index of national factory activity rose to 53.1 from 50.2 in December, beating economists' expectations of 50.6.
A reading above 50 indicates expansion in the manufacturing sector.
GREG MOORE, CURRENCY STRATEGIST, TD SECURITIES, TORONTO:
"All the reports are very constructive and supports the idea that the U.S. economy is on the mend. The reports also reduce some of the concerns about a recession. I think overall traders will look to economic data more than risk sentiment to determine where currencies are headed."
TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:
"We have now seen two of the most important economic indicators of the month, payrolls and ISM, and both were fairly constructive. However, this does not suggest a change in the trajectory in the first half of the year since there are a lot of headwinds, with the payroll tax hike and discord in Washington.
"There is little doubt that this year started off constructively as a result of the data this morning. Overall this was a good, solid report."
MICHAEL SHELDON, CHIEF MARKET STRATEGIST, RDM FINANCIAL, WESTPORT, CONNECTICUT:
"The ISM manufacturing index rose from 50.2 to 53.1. This is a stronger reading than expected, and when you look beneath the surface at the two most important components - production and new orders - those both rose. New export orders, which is also something to key an eye on, fell slightly but remained above 50 for the second straight month. That's positive because actual exports tend to follow this figure... so maybe there's some hope for export-led growth going forward.
"When you combine this with the China manufacturing data overnight, which remained above 50 for the fourth consecutive month, and the relatively positive employment data that came out earlier today, it shows the U.S. economy in early 2013 has some decent momentum to it to start the new year."
STEPHEN STANLEY, CHIEF ECONOMIST, PIERPONT SECURITIES, STAMFORD CONNECTICUT:
"I like the fact that all the components were stronger. One caveat is that January has the tendency for this number to be high, maybe it's more inflated than reality.
"Global business activity is still muted. When you look at levels of the two countries doing the best, which are China and the United States. They are barely above 50 so it's not like anyone is taking off right now."
WAYNE KAUFMAN, CHIEF MARKET ANALYST AT JOHN THOMAS FINANCIAL IN NEW YORK:
"I think it is just a continuation of the fact that the economy has been slowly improving ... The stock market is reflecting the fact that the economy has been improving, there's just no doubt about that".
STOCKS: U.S. stocks added to gains. The dow Industrials .DJI was above 14,000 for the first time since October 17, 2007 .N
BONDS: U.S. bond prices pared gains to turn negative<USD/>
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GRAPHIC: The Institute for Supply Management's gauge of U.S. manufacturing shows the sector expanded in January at its fastest pace in nine months. link.reuters.com/vef94t
(Americas Economics and Markets Desk; +1-646 223-6300)