A surprising jump in manufacturing

Manufacturing in the U.S. unexpectedly expanded in January, showing that business investment is holding up even as other parts of the economy weaken.

The Institute for Supply Management’s manufacturing index rose to 50.7 from 48.4 in December, the Tempe, Ariz.-based group said Friday. Fifty is the dividing line between contraction and expansion.

“There’s still reasonable growth in the manufacturing sector. That’s what we’ve been experiencing as well,” said Dennis Sadlowski, chief executive of Siemens Energy & Automation Inc. in Alpharetta, Ga.

Economists had forecast that the ISM gauge would fall to 47.3, according to a Bloomberg survey. ISM’s employment measure dropped to 47.1 from 48.7 in December.

The group’s measure of prices paid rose to 76 from 68 in December. Economists had forecast the measure would hold at 68.

The increase reflected higher orders and exports. Demand from overseas has helped sustain U.S. growth even with the collapse of the housing market and faltering consumer spending.

The U.S. manufacturing report showed new orders rose to 49.5 from 46.9. The production measure rose to 55.2 from 48.6.

Another report Friday found that spending on U.S. building projects fell twice as much as forecast in December, reflecting the worsening slump in housing and a drop in public construction.

The 1.1% decrease was the biggest in more than a year and followed a 0.4% drop the prior month, the Commerce Department said.