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Strong January Factory Output Points To Improvement In Global Demand

Manufacturing activity climbed last month to reach the fastest pace of growth in seven months, according to a report released Wednesday by the Institute for Supply Management. The ISM's January manufacturing index reached 54.1, up from 53.1 the month before. Readings above 50 indicate an expanding market.

The report bodes well for the global supply chain, as gains in factory production suggest improvements in both consumer and mid-market demand. However, many analysts are still worried that decaying sentiment in Europe, due to that region's mounting fiscal debt crises, may eventual hit manufacturing activity in the U.S.

Nonetheless, January's reading marked the 30th consecutive month of growth in the U.S. manufacturing sector - an industry that employs roughly one in six private workers and is considered instrumental in achieving any sort of economic recovery.

"Manufacturing jobs appear to be recovering, albeit at a modest pace," Michael Woolfolk, a currency strategist at BNY Mellon, told Reuters. "The ADP numbers this morning also indicate that we have sustained jobs growth. All in all, this is a report that's encouraging and is consistent with the current recovery, which should produce 2.5 to 3 percent growth this year."

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