U.S. manufacturing began this year on a positive note, expanding at a faster pace, according to a closely watched survey of the sector released Wednesday.
The Institute of Supply Management's survey of manufacturing purchasing manages rose to 54.1 percent from 53.9 percent -- the best reading since June 2011. However, that is slightly below the 54.5 percent forecast of economists surveyed by Thomson Reuters.
Any reading above 50 percent indicates improvement in the sector.
The new orders index registered 57.6 percent in January, which is an increase of 2.8 percentage points when compared with the seasonally adjusted December reading of 54.8 percent.
The ISM survey also found production and employment in the sector growing in January, though slower than their December growth rates. Apparel, paper products and transportation equipment industries are among the top employers in the sector.
Manufacturing will continue to grow, Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, told Bloomberg before the report. Autos are a positive industry within manufacturing as there's a lot of pent-up demand. Inventories are in a spot where they will be supportive of factory activity.
Caterpillar Inc. (NYSE:CAT), the world's largest maker of construction and mining equipment, posted a 58 percent jump in its fourth-quarter profit that blew away Wall Street expectations on record sales of earth-moving machinery and trucks.
Ford Motor Company (NYSE:F), the second-largest U.S. automaker, reported its third straight year of profitability on Friday. Meanwhile, Chrysler Group LLC, the smallest of Detroit's automakers, reported a 44 percent rise in its fourth-quarter U.S. sales Wednesday on demand for Jeep sport-utility vehicles and Ram pickups.
Manufacturing accounts for about 12 percent of the U.S. gross domestic product.