If the nation is about to enter a recession, then somebody better tell the Institute for Supply Management’s manufacturing index that rose to a seven month high last month, the important new orders component continuing to indicate a healthy expansion.

The overall index, where readings above and below 50 indicate expansion and contraction, respectively, rose from 53.1 in December to 54.1 in January and, while this was slightly below consensus estimates, a jump in the new orders component from 54.8 to 57.6 compensated for that disappointment.

Not surprisingly (given the rise in new orders) backlog orders rose from 48.0 to 52.5, however, there were a few negatives as production fell from 58.9 to 55.7 and the employment index dipped from 54.8 to 54.3.

The Commerce Department reported that the U.S. economy grew at an annual rate of 2.8 percent in the fourth quarter, a slightly slower pace than expected.

This is the first of three estimates for the period and marks the best growth rate in a year-and-a-half following a reading of 1.8 percent in the third quarter. But, don’t be surprised if the most recent data is revised lower since downward revisions have been the norm in recent quarters, the third quarter data starting out at a similar level – a 2.5 percent rate – when it was initially reported.

The bulk of the overall gain (more than 1.9 percentage points of the 2.8 percent figure) came from rising inventories and, since this category is subject to heavy revisions in the second estimate, there is more reason to think that GDP could be revised lower next month.

Personal consumption made a positive contribution of 1.5 percentage points, primarily the purchase of durable goods, and government spending subtracted 0.9 percentage points while net exports were a small negative.

Faster growth to close out 2011 ended a sluggish year as the economy grew by just 1.7 percent, down from 3.0 percent in 2010 after contraction in both 2008 and 2009.

The Institute for Supply Management reported that economic activity in the manufacturing sector expanded at its fastest since June, the ISM manufacturing index rising from 50.8 in October to  52.7 in November, as new orders surged.

This marks the 28th straight month of growth in manufacturing (recall that numbers above and below 50 indicate expansion and contraction, respectively), and the important new orders index indicated growth for the second month in row after three straight months of contraction, jumping 4.3 percentage points to 56.7 percent.

Production surged from 50.1 in October to 56.6 in November, but the employment index dipped from 53.5 to 51.8 and, in a sign that pricing pressure may have reached a bottom, the prices paid component rose from 41.0 to 45.0