U.S. manufacturing activity jumps in December

U.S. manufacturing activity jumps in December”

USA factory activity rose more than expected in last December, the latest sign of strong US economic momentum, the data released by The Institute for Supply Management (ISM) revealed on Wednesday.

December marked 16 consecutive months of growth in the manufacturing sector and 103 straight months of growth for the USA economy as a whole.

A headline reading above 50 indicates that the manufacturing economy is generally expanding, below 50 indicates that it is generally contracting.

Even so, 11 of the 18 industries covered reported an increase in hiring, and only two reported a decline. Also increasing with the PMI was the new orders index, which rose to 69.4% from 64% the previous month. That's the fastest pace of new orders since January 2004.The employment index was one of the only weak spots, falling to 57 from 59.7.

Export orders grew 2.5 points to 58.5, indicating growth for the twenty-second consecutive month.

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

New business received by manufacturers continued to rise in December, with the rate of expansion accelerating to a ten-month high.

"The upbeat mood is underscored by an increased appetite to hire new staff, with the survey indicating that factory payroll numbers are rising at a rate not seen for over three years".

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.

"Our belief is that investment spending will be stimulated in 2018 by the cut in corporate taxes and this will be a strong positive for manufacturing", RDQ said in a research note, adding that the jump in new orders "is certainly consistent with this thesis".

The Prices Index was 69 percent in December, a 3.5 percent increase from last month, and representative of higher raw materials prices for the 22nd consecutive month.

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