A report from the Institute for Supply Management (ISM) showed the U.S. manufacturing sector expanded in January at a faster pace than in December. 

The ISM's index of manufacturing activity came in at 56.6 percent last month, up 2.3 percentage points from the December reading of 54.3 percent, exceeding economists' forecast for a 54.2 percent reading. A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction. 

The monthly gain by the headline index was primarily attributable to faster increases in the new orders index (+6.9 percentage points m-o-m to 58.2 percent in January) the production index (+6.4 percentage points m-o-m to 60.5 percent) and the inventories index (+1.6 percentage points m-o-m to 52.8 percent) Meanwhile, employment index registered a slight decrease (-0.5 percentage point m-o-m to 55.5 percent).

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee said, “The past relationship between the PMI and the overall economy indicates that the PMI for January (56.6 percent) corresponds to a 4-percent increase in real gross domestic product (GDP) on an annualized basis.”