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		Home Page Manufacturing Index Rises to 63.6 in ISM Survey, Highest Since End of 1983 Feb. 2 (Bloomberg) -- An index of U.S. manufacturing rose to a two-decade high in January as factories boosted production to replace depleted inventories and meet improving demand, an industry report showed. The Institute for Supply Management's factory index last month increased to 63.6, the highest since 1983, from 63.4 in December. It's the eighth month the index has been greater than 50, signaling expansion. The pace of growth in the last six months of 2003 was the strongest in almost two decades causing inventories to drop to record lows. Reduced stockpiles and rising sales suggest that manufacturers will be ramping up production to keep pace, bolstering the economy. ``Inventories remain lean so the signs of continuing growth in demand should encourage more aggressive restocking in the first half of 2004,'' said David Resler, chief economist at Nomura Securities International in New York. Economists had expected a reading of 64 in the factory index, based on the median of 57 forecasts in a Bloomberg News survey. The January reading was the highest since 69.9 in December 1983. The Tempe, Arizona-based, group surveys more than 400 companies in 20 industries, including clothing, printing, transportation, furniture and plastics. Manufacturing accounts for about one- seventh of the economy. White House Forecast The economy will grow 4.4 percent this year, leading to more hiring and corporate investment, after 3.1 percent in 2003, according to assumptions in the White House's fiscal 2005 budget. Because of tax cuts and the lowest Federal Reserve benchmark interest rate since 1958, ``the economic outlook appears brighter now than at any time in recent years,'' President George W. Bush's economic advisers said. A separate report from the Commerce Department showed sluggish job growth is restraining incomes. Wages and salaries fell 0.3 percent, the biggest decrease in 17 months, during December. At the same time, personal spending adjusted for a rise in inflation grew 0.2 percent in December. The new orders index, which accounts for about a third of the total, slipped to 71.1 from 73.1 in December. The production index, a gauge of work being performed, also rose to 71.1, the highest since 80.6 in December 1983, from 69.2. Inventories The index of inventories rose to 48.9 from 46.3, indicating inventories are being run down at a slower pace. The employment index slipped to 52.9 from 53.5. The backlog of orders index eased to 60.5 from 61. The new export orders index fell to 57.5 from 60. The index of supplier deliveries, which measures how long it takes to get materials, rose to 60.4 from 58.6. The supply managers' prices paid index jumped to 75.5 last month from 66. ``As we go into 2004, we see the economy picking up,'' said William Stavropoulos, chief executive of Dow Chemical Co., in a televised interview with Bloomberg News Thursday. ``We will continue to increase our sales going into 2004.'' Dow, the largest U.S. chemical maker, last week said it posted the most quarterly profit in at least a decade during the fourth quarter as sales rose 20 percent. Dow is raising prices as demand improves for chemicals used in products such as electronics and furniture. Durable Goods Maytag Corp., the No. 3 U.S. appliance maker, said last week that fourth-quarter earnings surged more than sevenfold after it lowered costs, and sales jumped the most in almost two years. Sales of major appliances, including Maytag energy-saving refrigerators and cooking ranges, jumped 15 percent in the quarter. Four consecutive months of factory production increases as of December failed to keep inventories from falling relative to sales last quarter. Makers of long-lasting, big-ticket items, such as computers and automobiles, had enough stock on hand to fill 1.41 months worth of sales at the current pace, an all-time low, according to figures from the Commerce Department last week. Xilinx Inc., the world's biggest maker of programmable semiconductors, is building inventory after stock of its chips got ``too lean,'' Chief Financial Officer Kris Chellam said last week in a televised interview with Bloomberg News. Demand for the semiconductors used in communications equipment, DVD players and mobile phones that may lead to as much as a 32 percent jump in sales this quarter is forcing the San Jose, California-based company to keep more chips on hand, Chellam said. 2003 The economy grew at an average of 6.1 percent in the last six months of 2003, the strongest performance since the first half of 1984. It's projected to grow at a 4.3 percent annual pace this quarter and expand 4.4 percent for the year, according to the median estimates in a Bloomberg News survey of economists earlier this month. The economy grew 3.1 percent in 2003. Manufacturing may also be getting a boost from rising exports. Growth last quarter was augmented by a 19.1 percent jump in exports at an annual basis, the biggest increase in seven years, the Commerce Department reported Friday. The value of the dollar has dropped 9.8 percent against a trade-weighted basket of currencies from a broad group of the country's trading partners since reaching a high in February 2002. A cheaper dollar makes American-made goods cheaper for foreigners. ``With many foreign economies now starting to register stronger demand, and with the foreign exchange value of the dollar now favoring U.S. producers, net exports could be a positive force again this year,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York, before the report. U.S. Dollar Caterpillar Inc., the world's largest maker of earthmoving equipment, said last week that 2004 profit will rise 40 percent as low interest rates lift sales. Sales rose 20 percent in the fourth quarter and will rise 12 percent this year, the Peoria, Illinois- based company said. The drop in the dollar against the euro ``has significantly improved our competitiveness,'' said James Owens, vice chairman and future executive officer of Caterpillar Inc., the world's largest maker of earth-moving equipment, in a televised interview with Bloomberg News last week. In addition, demand in China is ``growing quite rapidly,'' he said. In Europe last month, an index of manufacturing rose to the highest in three years, reflecting increased export demand from the U.S. and Asia. An index based on a survey of 2,000 purchasing managers compiled for Reuters Group Plc by NTC Research Ltd. rose to 52.5 from December's 52.4, figures from the news agency available on the Internet showed. A reading of more than 50 shows expansion.   Back to Original Article: Mortgage News You Can Use   Continue with: Consumers still spending in Dec.; savings rate falls Factory growth at 20-year high in Jan. Economic Recovery Supported by Reports Consumer Spending up 0.4% in December GDP Up 4% In Q4, Short Of Forecasts But Still Solid Gain Federal Debt; Robbing Peter Jr. to Pay Paul Sr. Euro strength curbs eurozone manufacturing growth
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