The Institute for Supply Management's key purchasing managers' index for manufacturing reached its highest level in January since August 2004.

January's index reading of 58.4 marked an increase in the rate of expansion in the manufacturing segment over December's reading of 54.9. Readings of more than 50 indicate expansion.

"This month's report provides significant assurance that the manufacturing sector is in recovery," said Norbert Ore, chair of the institute's manufacturing business survey committee.

The employment portion of the index rose to 53.3 in January from 50.2 in December.