The U.S. National Association of Purchasing Managers’ Index came in stronger than expected for November, perhaps signaling the move from recession to recovery.

The NAPM PMI rose to 44.5 in November, still in recession territory, but much better than expected particularly after last week’s very weak report from the Chicago purchasing managers.

But there is still a long way to go before growth is back on track, says BMO Nesbitt Burns. “The report showed that manufacturing is not collapsing, which is a relief given the global slowdown and soaring U.S. dollar. The sector may actually be poised for recovery when inventories are brought down to desired levels early next year. Key leading components, particularly new orders, accounted for the bulk of the gains, pointing the way for more production growth ahead.”

“While the U.S. manufacturing sector remained in recession in November, a slowdown in the pace of contraction offers some hope that the sector may pull out of its 16-month downturn in the next few months — which will go a long way to keeping the recession in the overall economy a shallow one,” says TD Bank economists.

It notes that manufacturers continue to slash payrolls and inventories, which will help many weather the downturn. “And, sliding commodity prices kept the NAPM prices paid sub-component on the wane, helping to take some of the stress off sagging bottom lines. All told, this report adds to the mounting evidence the manufacturing sector will not drag the overall U.S. economy into a deeper recession,” TD says.

But, BMO reminds us that profits are usually under severe pressure when pricing power is this weak. “Thus, the report is still a sign of softness despite the increase in the headline NAPM Index. Typically, as the economy evolves from recession to recovery, uneven news is the result. In that context, the November NAPM was a step toward brighter days ahead.”