US manufacturing growth slows in Jan as new orders plunge

NEW YORK (Reuters) - United States manufacturing grew less briskly in January after hitting an 11-month high the prior month as output and overseas demand slowed, an industry report showed on Thursday.

Financial data firm Markit said its final US Manufacturing Purchasing Managers Index fell to 53.7 in January, matching an advance reading earlier in the month. The index hit an 11-month high of 55.0 in December. Readings above 50 indicate expansion.

Output fell to 53.5, a four-month low, from 57.5. Some companies attributed the slower pace of growth to the extremely cold weather in large swaths of the country.

New export orders meanwhile declined for the first time since October.

Companies took on new workers, however, for the seventh-straight month, though the pace of hiring eased slightly, with the sub-index dropping to 53.2 from 54.0.

"The rate of job creation remained solid and was only slightly less marked than December's recent high," Markit said in a statement. "Panel members attributed increased workforce numbers to rising production requirements."

The Institute for Supply Management (ISM) said its index of national factory activity fell to 51.3 last month, to its lowest level since May 2013, from a recently revised 56.5 in December.

January's figure was also well below the median forecast of 56 in a Reuters poll of economists, missing even the lowest estimate of 54.2. Readings above 50 indicate expansion.

The January reading marked a second-straight month of slowing growth from November's recent peak reading of 57, which had been the highest since April 2011, suggesting the economy may be losing some of the momentum it had enjoyed in the second half of 2013.

The biggest red flag in the ISM report was the huge drop in the forward-looking new orders index, which fell to 51.2 from 64.4 in December. That 13.2-point drop was the largest monthly decline in that key component since December 1980.

Indicators of employment, production and inventory growth also declined from December. At 52.3, the employment reading was the weakest since June and well below December's 18-month high of 55.8.

Meanwhile, the prices index surged to 60.5 from 53.5, the highest reading since last February.

Wall Street was poised to edge up on Monday, ahead of data on the housing and manufacturing sectors, after the S&P 500 closed its worst month since May 2012 on Friday.