WASHINGTON (AP) — U.S. manufacturing activity grew at afaster pace in January behind an increase
in new orders and more hiringat factories.The Institute for Supply Management said Friday thatits index of
manufacturing activity jumped to 53.1 in January from 50.2in December, the trade group said Friday. It was
the highest readingsince April, when the index hit 54.1.Any reading above 50 indicates expansion.Thesecond
straight monthly increase in the index showed manufacturing isstarting to grow again after struggling
through most of 2012. Increaseduncertainty about tax increases and government spending cuts led
manycompanies to cut orders for machinery and equipment earlier this year.And a weaker global economy
dampened demand for U.S. exports.TheJanuary growth in manufacturing was also encouraging because it
showedthat factories saw greater demand even as consumers started to payhigher Social Security taxes. That
left them with less take-home pay,which could hurt consumer spending.And the survey came hoursafter the
Labor Department reported that the job market held steady atthe end of last year even as economic growth
stalled. The LaborDepartment Friday said employers added 157,000 jobs in January and jobgrowth was stronger
than previously thought in December and November.Manufactures added 4,000 jobs last month, the fourth
straight monthly increase."There’sa fair bit of optimism here to start the year," said Dan
Greenhaus,chief global strategist with BTIG LLC, a trading firm based in New York.He said the data show that
the economy "is resilient to the debate inWashington" about possible tax increases and spending
cuts.Greenhaussaid the solid manufacturing gains, especially in new orders andemployment, suggest that
"the larger story remains intact, of amoderate, ongoing recovery."The ISM report showed that 13 of
the18 industries surveyed grew last month. They included manufacturers ofplastics and rubber, textiles,
furniture, printing, and apparel. Fourindustries reporting contraction: minerals, computers and
electronics,wood and chemicals.The survey’s new orders index returned togrowth, rising to 53.3 in January
from 49.7 in December. Companiesreported adding to their inventories in January after two months ofdeclines,
a sign that factories are preparing to boost production.Slowergrowth in stockpiles was a key reason the
economy shrank at an annualrate of 0.1 percent in the October-December quarter, the firstcontraction in 3 ½
years. Deep cuts in defense spending and fewerexports also contributed to the decline.Most analysts
predictthat the economy will grow again in the January-March quarter, thoughlikely at a lackluster annual
rate of around 1 percent. They expect theeconomy to expand about 2 percent for the full year.Still, a
bigquestion is how consumers respond to the increase in Social Securitytaxes. A person earning $50,000 a
year will have about $1,000 less tospend in 2013. A household with two high-paid workers will have up
to$4,500 less. Taxes rose after a 2 percent cut, in place for two years,expired Jan. 1.Analysts expect the
Social Security tax increaseto shave about a half-point off economic growth in 2013, since consumersdrive
about 70 percent of economic activity.The ISM is a trade group of supply management professionals. Its index
is based on a monthly survey of manufacturing executives.___Daniel Wagner can be reached at www.twitter.com/wagnerreports .Copyright
2013 The Associated Press.