New figures show orders for and shipments of manufactured goods posted an increase in January.

The U.S. Commerce Department reported new orders for manufactured goods increased 1.6%, the second increase in a row, following a revised 0.7% December increase. The jump was better than many analysts were expecting, but new orders are still 3.4% below the level of January 2001.
Manufacturing shipments increased 2%, the fourth monthly increase, following a 0.6% December jump, but still remain 8.4% lower than the June 2000 peak level in this cycle. Shipments for January 2002 are also 4.1% below the same time a year ago.
Shipments of durable goods in January increased 2.6%. This sector was led by semiconductors and primary metals, says Newport Communications Senior Economist Jim Haughey.
“While non-durable goods shipments, mostly carried in dry vans, rose 1.1%, this is the second consecutive monthly gain for non-durables that typically lag the rest of manufacturing in a recovery,” he says. “Production still lags shipments because inventories declined 0.6% in January."
Inventories fell for the 12th consecutive month, leaving the inventories-to-shipments ratio at 1.33, down considerably from 1.56 a year earlier.
“Manufacturers are probably targeting a ratio of about 1.28,” says Haughey. “This means several more months of small inventory reductions before production rises fully to the level of consumption. Virtually all of the surplus inventory is held by durable goods manufacturers and their distributors."
These latest numbers, along with news reported last Friday from the Institute of Supply Management that the manufacturing sector reported its first expansion in a year and half during February, add to increased optimism that the nation’s struggling manufacturing sector is seeing signs of recovery.