ISM Manufacturing Index Shows Contraction in January

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The Institute for Supply Management’s January manufacturing index showed a contraction, as factories reined in orders to trim inventories, ISM said Thursday. The group’s factory index fell to 49.3 from December’s 51.4 level. Readings above 50 indicate growth, while those below 50 show contraction. The index measures U.S. manufacturing activity.“In overall terms, manufacturing lost momentum in the second half of 2006, and is starting 2007 in a less than robust fashion,” said Norbert Ore, chairman of ISM’s manufacturing survey committee.“Also, results show a significant decline in the inventories index to the lowest level since February 2002, indicating that a significant liquidation is taking place in many supply chains,” he said in a statement on the group’s Web site.The new orders index fell 1.6 to 50.3, while production dipped 2.8 to a 49.6 reading.The prices paid index rose 5.5 points to 53, while the employment gauge edged up 0.1 to 49.5.