Feb. 1 (Bloomberg) -- Manufacturing in the U.S. grew in January at the fastest pace in seven months, a sign the industry will lead the U.S. expansion early this year. The Institute for Supply Management's manufacturing index climbed to 54.1, less than projected, from 53.1 in December, the Tempe, Arizona-based group's report showed today. Figures greater than 50 signal expansion. The median forecast of economists surveyed by Bloomberg News was 54.5. Orders and export demand picked up last month.
Factory production, led by inventory rebuilding at the end of 2011, is poised to keep expanding as the need to update equipment drives orders at companies like Caterpillar Inc. and demand for cars lifts sales at automakers. More growth in the industry will help cushion the world's largest economy from a slowdown in Europe caused by the region's debt crisis.
“Things are looking pretty good,” said Eric Green, chief market economist at TD Securities Inc. in New York, who correctly forecast the figure. “Manufacturing has been outperforming this whole recovery.”
The median forecast of economists was based on 80 projections in the Bloomberg survey. Estimates ranged from 53 to 56.
Stocks extended gains and Treasuries fell after the figures, with the Standard & Poor's 500 Index climbing 1.1 percent to 1,326.76 at 10:22 a.m. in New York. The yield on the benchmark 10-year rose to 1.84 percent from 1.8 percent late yesterday.
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