business

Two widely read barometers of manufacturing activity Wednesday reported healthy growth in January, and both showed signs that a more sustained recovery could be ahead.

Manufacturing experts say factories that make products for businesses, not consumers, are seeing the heaviest activity and fueling the gains. Exports were also a major factor in some manufacturers' stronger results.

A survey of the mid-America region by Creighton University saw its index jump from 50.0 in December to 55.9 in January, the largest monthly gain since October 2009. A reading above 50 indicates growth. The study's "confidence index" that measures respondents' outlook for the next six months posted an especially strong increase, from 59.2 to 67.2.

A similar nationwide survey by the Institute for Supply Management (ISM) had a more modest increase in its overall index, from 53.1 in December to 54.1 in January. A stronger gain came in an index component that measures new orders. It rose from 54.8 in December to 57.6 last month. The substantial increase in new orders was at odds with some economists' projections that businesses would curtail orders.

"That shows there's a lot of momentum for manufacturers coming into the new year," said Josh Bushard, manufacturing leader at audit, tax and advisory firm Grant Thornton's Minneapolis office. He said healthy new order levels are prompting some of his clients, midsized manufacturing firms, to start hiring new workers on a modest scale.

Bushard said manufacturers that work in the business-to-business market are posting the strongest results. That includes companies that make business equipment or parts for other manufacturers. "I wouldn't say consumers are leading the charge for the recovery in manufacturing," Bushard said.

Chuck's Grinding Inc., a Chanhassen firm that does precision grinding for a variety of manufacturers, saw a huge jump in bid requests in January, said owner Jean Bloomquist. The company quoted its prices on more than 100 jobs last month; for all of last year it supplied quotes on 800, she said.

"It's all across the board in a variety of businesses," she said of the bid requests. "We see that as a very positive indicator."

Original equipment manufacturers currently are the busiest customers of Checker Machine in New Hope, according to President Steve Lipinski. The company produces parts and equipment for a variety of industries, including computer testing and food processing.

Lipinski said Checker added six people to its workforce last year, bringing the total to 53. He said he expects to hire a few more machinists and welders soon.

While the ISM study showed a slight slowdown in hiring, the Creighton index reported a strong increase from 49.5 in December to 54.5 in January. Prof. Ernie Goss, who compiles the Creighton study, said he wants to see several more months of similar readings before declaring that the region's labor market is back on a solid growth track.

Goss said the robust farm economy continues to fuel growth in the region. "Almost one in five, or 19 percent, of supply mangers reported that growth in farm income has been an important factor pushing their firm's growth higher," he said.

Minnesota was one of eight states in the study's nine-state region that posted growth in January. The only one that didn't, Kansas, reported no change in its index from December.

Export activity rose in both studies, and in the Creighton study, it hit the highest level since February 2011. Goss attributed the gains to the ongoing weakness in the dollar, which makes goods produced in the U.S. cheaper abroad.

Respondents to the Creighton survey said rising energy prices and increasing federal regulations were the biggest risks that could dampen future economic expansion. Forty-six percent of supply managers surveyed said rising energy prices were the greatest threat to growth prospects for their firms.

Staff writer Patrick Kennedy contributed to this report. Susan Feyder • 612-673-1723