ISM: Manufacturing Production Expanded at Fastest Pace in 7 Months

Factory output soared in January to reach the highest level in seven months, offering strong hope that factory manufacturing activity will spearhead a more robust economic recovery in 2012.

The Institute for Supply Management's latest manufacturing index rose to 54.1 points last month, up from 53.1 in December. Any figure greater than 50 indicates an expanding industry.

Bloomberg reports that the uptick was driven primarily by company benchmarking and inventory rebuilding, and that factory production will likely continue to improve in coming months on higher demand for automobiles and equipment.

Analysts still fret about the impact of the ongoing European debt crisis, which is likely to send the continent spiraling into recession.

"If Europe is already in recession, we should see some of that reflected in manufacturing," economic advisor Joel Naroff told Reuters. "The export component is growing. Europe is going to be a problem, but people need to step back and decide how big of a problem it is. It will hit manufacturing more heavily. We are just not seeing the manufacturing sector being hit yet."

ADP released its National Employment Report the same day as the ISM report, showing the addition of 10,000 manufacturing jobs in January.