U.S. manufacturing activity stumbled in January, as price pressure ticked up and factory operators liquidated inventories.

Meanwhile, accelerating income gave consumers the wherewithal to boost their spending at the highest rate in five months during December, but Americans’ saving rate continued its long decline.

The Institute for Supply Management today reported that its January manufacturing business index moved to 49.3, from the 51.4 in December and 49.9 in November.

Readings above 50 point to expansion in activity and describe the breadth of the change.

Economists had expected the index to stand at 52.0.

“The manufacturing sector failed to grow in January” and “the signals are clear that there is relatively little change taking place in the sector, as the manufacturing index has averaged 50.5% for the past four months,” said Norbert Ore, who directs the ISM manufacturing survey. “Manufacturing lost momentum in the second half of 2006, and is starting 2007 in a less than robust fashion,” Ore added.

In the details of the report, the group found that manufacturers’ inflationary pressures picked up, as the prices index rose to 53.0, from 47.5 the prior month. The production index slipped to 49.6, from 52.4 in December, while the January new orders index hit 50.3, down from 51.9.

Meanwhile, the January ISM manufacturing employment index hit 49.5 after standing at 49.4. The group’s inventories index stood at 39.9, from 48.5 the prior month.

Meanwhile, U.S. personal income increased at a seasonally adjusted rate of 0.5%, after rising an unrevised 0.3% in November, the U.S. Commerce Department said today. For all of 2006, income climbed 6.4%, the biggest annual gain since 8% in 2000.

Personal spending rose by 0.7%, after increasing an unrevised 0.5% in November. Spending in 2006 rose 6%, less than 2005’s 6.5% gain.

The income and spending readings for December both matched estimates of economists.

A price index for personal consumption expenditures — or PCE — excluding food and energy inched 0.1% higher in December compared with a month earlier. It was unchanged in November.

Compared with a year earlier, the core PCE price index rose 2.2% in December, the same rate as in November. The Federal Reserve’s comfort zone is 1% to 2% for the inflation gauge.

Separately, the number of U.S. workers filing new claims for unemployment benefits fell last week and the four-week average tumbled to its lowest level in almost one year.

Seasonally adjusted claims for unemployment insurance fell 20,000 to 307,000 in the week ended Jan. 27, the U.S. Labor Department said Thursday. The Jan. 20 reading was revised to 327,000 from a previously reported level of 325,000.