Was The Best Year For US Manufacturing Since 2004

Marco Green
January 13, 2018

Manufacturing sizzled in December, reaching an nearly seven-year high, led by new orders and production, the Institute for Supply Management (Tempe, AZ) said today.

"Economic activity in the manufacturing sector expanded in December, and the overall economy grew for the 103rd consecutive month", said ISM. The New Orders Index registered 69.4, an increase of 5.4 percentage points from November while the Production Index registered 65.8, a 1.9 percentage point increase compared to the month before.

Looking at other key measures in the report, production (up from 63.9 to 65.8), supplier deliveries (up from 56.5 to 57.9) and imports (up from 54.5 to 57.5) also increased more briskly in December.

Fiore, chair of the ISM, said: "This indicates growth in manufacturing for the 16th consecutive month, led by strong expansion in new orders and production with hiring growing at a slower rate and supplier deliveries continuing to struggle". The one disappointment was the employment index, which fell almost three points to a still-strong 57 per cent.

The December PMI registered 59.7, an increase of 1.5 percentage points from the November reading of 58.2.

A reading above 50 indicates expansion, while a reading below signals contraction. Price increases continued at a faster rate. Ten industries reported higher inventories, while seven reported a decrease.

Of the 16 industries reporting growth in December, the machinery, chemical, and computer and electronic products sectors reported the biggest gains. Heading into 2018, it will be interesting to see if these trends continue or if production levels can pace closer to new orders.

Andrew Hunter, US economist at Capital Economics, said the rebound in the ISM manufacturing index leaves it close to a 13-year high and at a level that historically has been consistent with GDP growth accelerating to more than 4% in annual terms.

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