Manufacturing Expands At Fastest Pace Since June

The reports bolster 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.

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.

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