TEMPE, AZ—U.S. factories showed a third straight month of growth in January, and new orders and production continued to grow.

According to the Institute for Supply Management’s (ISM) index of manufacturing business conditions, manufacturing came in at 53.9, a slightly slower pace than December’s 55.2, but still above the 53.7 ISM economists had forecasted. Any reading above 50 generally indicates a growth in manufacturing, while a reading below 50 generally signals a decline in the sector.

ISM’s New Order Index declined 3.2 percentage points from December’s 62.9% to 59.7% in January. ISM’s Production Index declined 0.3 percentage point from 56.6% in December to 56.3% in January. The Employment Index is at 47.6% for January, a decrease of 0.6 percentage point when compared to December’s 48.2%.

Norbert J. Ore, chair of the institute’s Manufacturing Business Survey Committee, says that the growth is “providing cause for optimism for an improving economy in the first quarter.”