Manufacturing at 20-year high; hiring lags

Manufacturing in the United States surged to a 20-year high at the start of the year, as factories scrambled to meet demand, reports showed Monday.

Even with improved factory production, however, manufacturers remained cautious about hiring, dampening hopes for a turnaround in production jobs.

The closely watched Institute for Supply Management’s (ISM) manufacturing index rose to 63.6 in January – the highest since late 1983 – from a revised reading of 63.4 the prior month. That was shy of economists’ expectations of a rise to 64.

The ISM survey’s new orders measure, a key barometer of future growth, was at the best level since the early 1970s.

But the surge in factory output has yet to translate into jobs, and the employment index slipped to 52.5 in January, from 53.5 in December.

Although the economy has picked up in the past six months, robust hiring has been missing in the recovery.

The risk is that if the job market does not improve, consumer spending could falter.