WASHINGTON: US manufacturing posted the fourth straight month of faster expansion in December as new orders and output jumped, pointing to a growing economy, the Institute for Supply Management said Tuesday.
The ISM manufacturing index rose 1.5 points from November to 54.7 percent, with 11 of the 18 industries surveyed reporting growth, led by petroleum and coal products, primary metals, miscellaneous manufacturing, and food, beverage and tobacco products.
A reading in the purchasing managers index above 50 indicates growth and the index was well above the consensus forecast of 53.6 percent.
The gain was fueled by surprising 4.3-point jump in the production index and a 7.2-point surge in new orders, pushing those components above 60 percent for the first time since November 2014. They have been above 50 for four consecutive months.
New export orders rose four points to 56 percent, the highest point since May 2014, a good sign for foreign demand.
The employment component rebounded slightly, adding 0.8 point to 53.1, though only half the industries surveyed said employment had increased in the month.
“The global tallies for manufacturing are almost universally signaling good news; such simultaneous strength has not been present for quite a while,” IHS Global Insight US economist Michael Montgomery said in a commentary.
He said the recovery seems more durable since headwinds from factors like low demand for exports and the strong dollar have diminished. And “while headwinds from foreign trade still exist, they are not the gale-force winds of before.”
Economist Joel Naroff said, “It appears that President Obama will be leaving his successor with a pretty good economy.”
“Manufacturing has been the weakest link in the economy for a couple of years now, but that appears to be changing.”