WASHINGTON (AP) - U.S. factories grew in January at the fastest pace in seven months, boosted by a rise in new orders.
The report bolsters other data showing the U.S. economy started the year strong.
The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its manufacturing index rose last month to 54.1 from 53.1 in December. Readings above 50 indicate expansion.
Associated Press photo
Nilsa Rodriguez assembles hydraulic fittings at the Eaton Corp. plant in Berea, Ohio. U.S. factories grew in January at the fastest pace in seven months, boosted by a rise in new orders.
Consumers are buying more cars and trucks, while businesses ordered more machinery and other equipment. That has driven manufacturing, which expanded for the 30th straight month.
Both new orders and order backlogs rose to nine-month highs. Increasing order backlogs suggest manufacturers are lacking the capacity to meet demand. That could mean more growth in production and employment in the near future, economists said.
Export orders also rose, a sign that U.S. manufacturers haven't yet been affected by Europe's slowing economy.
"This is a very encouraging report on manufacturing activity that shows particular strength in leading indicators," said John Ryding, an economist at RDQ Economics.
The report followed other healthy readings on manufacturing in China, Germany and the United Kingdom.
Growing global demand for factory goods sent markets higher. The Dow Jones industrial average jumped 141 points in morning trading. Broader indexes also rose.
"A raft of business surveys around the world ... have signaled a better than expected start to 2012 for many countries," said Chris Williamson, chief economist at Markit, a financial information provider.
The best indication of the U.S. economy's health will come Friday, when the government reports on January hiring and unemployment.
Economists expect the economy added 155,000 net jobs, the seventh straight month of solid hiring. The unemployment rate is expected stay for the second month at 8.5 percent, near a three-year low.
Factories are still adding jobs but at a slower pace than in December.
Manufacturing output has jumped in recent months. Auto sales have rebounded from the spring, when Japan's earthquake disrupted supply chains and fewer cars were available on dealer lots.
Businesses also ordered more big-ticket manufactured items in December, the government said last week. And orders for so-called core capital goods, which are a good measure of businesses' investment plans, reached an all-time high last month.
Factory output rose in December by the most in a year, according to the Federal Reserve. Production rose for goods used in the early stages of manufacturing, such as metals, wood products and construction materials. That suggests the output of finished goods will pick up.
Still, economists are concerned that a key source of factory growth could wither in the coming months.
They note that a key reason the economy grew at an annual rate of 2.8 percent in the final three months of last year was that was companies restocked their supplies at a robust pace. That restocking is likely to slow in the first three months of this year.