By Joshua Jamerson

The U.S. manufacturing sector began the year on a strong note with output and new order growth accelerating since the end of 2016, according to a report Wednesday.

The report, from data provider IHS Markit, also suggested improving business conditions, given a sustained upturn in payroll numbers and the steepest rise in stocks of finished goods since 2007, when the index started.

The U.S. manufacturing purchasing managers' index compiled by Markit rose to 55.0 from 54.3 in December and an earlier "flash" reading of 55.1. Readings above 50 represent expansion, while prints below that level reflect contraction.

Chris Williamson, Markit's chief economist, said optimism about the year ahead was at the highest since last March.

"Production is consequently growing at the strongest rate for almost two years and inventories are rising at a rate not seen for nearly a decade as firms respond to higher demand, suggesting the goods-producing sector will make a decent contribution to first quarter GDP," Mr. Williamson added.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

February 01, 2017 10:36 ET (15:36 GMT)

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