One of the first looks at how the economy is doing in the New Year shows a further upturn in business conditions across the U.S. manufacturing sector, but the overall rate of improvement eased further from last August’s peak.

This was highlighted by a drop in the seasonally adjusted Flash U.S. Manufacturing Purchasing Managers’ Index from 53.9 in December to 53.7 in January, published Friday by the financial information services provider Markit Economics. Although the headline index remained above the neutral 50 threshold, the latest reading was lowest in 12 months.

Slower new business growth was a key factor weighing on the overall performance of the U.S. manufacturing sector in January, according to the report. Volumes of new work have increased in each month since September 2009, but the latest upturn was the weakest for a year and slightly slower than the average seen during the current period of expansion.

Reports from survey respondents suggested that improving domestic economic conditions continued to boost new order levels, but overall export demand remained lackluster. Meanwhile, some manufacturers noted that reduced spending among clients operating in the oil and gas sector had weighed on new order volumes during January.

“Business conditions continued to improve among U.S. factories at the start of the year, though the rate of growth continued to cool from the scorching pace seen in the summer months,” said Chris Williamson, Chief Economist at Markit. “The slowdown is being led by a weakening inflow of new orders, but the good news is that demand remained strong enough to drive yet another month of robust job creation at factories. Producers are also benefitting from the recent oil price slide, which helped reduce overall input costs for the first time for two-and-a-half years.”

He said the ongoing growth of output and employment, signaled by the survey, suggest that the process of the Federal Reserve gradually raising interest rates could be underway by mid-year. However, Williamson noted lower manufacturing costs resulting from the recent oil price drop should drive inflation down further in coming months, keeping interest rates low for longer.

Leading Economic Indicators

Meantime, a wider look at how the economy is doing and where it’s headed in the next three to six months showed an improvement for December, according to the private research group The Conference Board.

Its Leading Economic Index for the U.S. increased 0.5% in December to 121.1, following a 0.4% gain in November and a 0.6% increase October.

“December’s gain in the LEI was driven by a majority of its components, suggesting the short-term outlook is getting brighter and the economy continues to build momentum,” said Ataman Ozyildirim, economist at The Conference Board. “Still, a lack of growth in residential construction and average weekly hours in manufacturing remains a concern. Current economic conditions measured by the coincident indicators show employment and income gains are helping to keep the U.S. economy on a solid expansionary path despite some weakness in industrial production.”

Existing Home Sales

Finally, a third report economic reported showed existing-home sales bounced back in December and climbed above an annual pace of 5 million sales for the sixth time in seven months, according to the National Association of Realtors.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.4% to a seasonally adjusted annual rate of 5.04 million in December from a downwardly-revised 4.92 million in November. Compared to a year ago, December sales were 3.5% higher. It also marks the third straight month they are above year-over-year levels.

For all of 2014, there were 4.93 million sales, a 3.1% drop from 2013 level of 5.09 million and the first decline since 2010. The national median existing-home price was $208,500, the highest since 2007 when it was $219,000, and a 5.8% increase from 2013’s $197,100.

Lawrence Yun, NAR chief economist, said sales picked up in December to close a 2014 that got off to a sluggish start but showed encouraging signs of activity the second half of the year. “Home sales improved over the summer once inventory increased, prices moderated and economic growth accelerated,” he said. “Sales were measurably better in the second half, up 8% compared to the first six months of the year.”

December existing-home sales in the Northeast declined 2.9% from November but were 3.1% above a year ago, while in the Midwest, sales fell 3.5% from the month before and were 2.7% below December 2013. Existing-home sales in the South climbed 3.8% from the month before during December and were 7.4% higher than a year earlier, while sales in the West jumped 9.8% in December from November and 2.8% above a year ago.